Motorola takes the axe to 4,000 staff

Motorola is to shed a further 4,000 employees in its quest to cut costs.

The handset and network-equipment manufacturer claims the reduction in head count in 2008 will help shave $600m off its annual operating costs.

The company is already on course to have cut 3,500 jobs by the end of June as part of a structural review which was announced after its Q1 results this year. Motorola said at the time the review would save it $400m per year.

Tom Meredith, Motorola's chief financial officer, said: "Long-term, sustainable profitability is - and always has been - Motorola's top priority. We are confident that the steps we are announcing today, together with the actions that we have outlined previously, will further improve the company's financial and operational performance and create value for our stockholders."

Greg Brown, the company's president and chief operating officer, promised the cost reductions would have no adverse effect on Motorola's customer service and support, product quality or "those research and development programmes that are expected to contribute meaningfully to Motorola's revenues, profits and cash flow in 2008 and beyond".

There is, as yet, no word on how many jobs could go in Motorola's UK operations, or in which divisions of the company they will go.

Martin Garner, an analyst at Ovum, said the move revealed the seriousness of Motorola's portfolio problems. "This move strengthens our view that Motorola's handset product problems are deeper than was clear at the end of Q1," he said. "It is clear that Motorola has known for over six months that its handset product portfolio is in trouble but, apart from cutting costs, there is little evidence so far of steps to fix this."

Garner suggested "a broad-based overhaul" of all segments of Motorola's product portfolio might be necessary to put its business back on track.

David Meyer writes for ZDNet UK