How bad are things at Motorola? Bad enough that the company shipped just 19 million mobile phones during Q4 — down 54% from last year. Fourth quarter revenues will come in between $7.0 billion and $7.2 billion, down about 26% year-over-year and short of the Street’s $7.5 billion consensus.
What will Motorola do while new co-CEO Sanjay Jha tries to turn things around?
Cut more costs by firing more people. The company announced it will lay off another 4,000 workers this year, starting immediately, including 3,000 from its mobile phone business. This is in addition to the 3,000 layoffs they announced last quarter.
Today’s workforce reductions, plus other incremental cost-reduction initiatives, including those announced on December 17, 2008, are expected to result in additional annual cost savings of approximately $700 million in 2009. The savings from these actions, together with the $800 million of savings from other actions announced during the fourth quarter of 2008 are expected to result in aggregate cost savings of $1.5 billion for the Company in 2009.
Jha, whom Motorola (MOT) brought in from Qualcomm (QCOM) to lead its mobile phone division, says in a release that the company is “making good progress” in developing “important new smartphones” for 2009.
What we don’t know: If Motorola will discontinue its smartphone lineup based on Microsoft’s (MSFT) Windows Mobile platform, which a reader told us today. (Update: No. See below.)
Our reader suggests Motorola will instead focus entirely on phones running Google’s (GOOG) Android platform, “with strong experience focus in multimedia and social messaging.” Last year, Jha said Motorola would use Android for consumer-focused phones and Windows Mobile for business-focused phones. We’ve asked Motorola for clarification and will update if they reply.
Update: A Motorola rep says the company’s three pronged strategy — Windows Mobile, Android, and Moto’s own P2K for low-end phones — has not changed.
Motorola’s announcement seems to already be baked into its shares, which are down 70% from their 52-week high: MOT was flat in after-hours trading at $4.11. Motorola will report full Q4 results on Feb. 3.
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