graphic
graphic  
graphic
News > Technology
graphic
Motorola to cut 7,000 jobs
Wireless equipment maker to take $3.5B in charges; reaffirms 2Q and '02 guidance.
June 27, 2002: 7:44 AM EDT

NEW YORK (CNN/Money) - Wireless equipment manufacturer Motorola Inc. said Thursday it is cutting another 7,000 jobs as it takes $3.5 billion in charges to restructure its business and write down the value of some of its assets.

The company's CEO Christopher Galvin said in a statement that the company will aim to resize its operations to where it was in the mid-1990s in the belief that the rapid growth in the demand for its products seen in the late 1990s probably won't return.

graphic
graphic graphic
graphic
"The investment environment of the late 1990s may never repeat itself, because many of the business models so highly touted then never succeeded in the first place," Galvin said in a statement.

The world's No. 2 maker of cellular phone handsets after Nokia also reaffirmed its previous earnings guidance for the second quarter and full-year. The company had previously said that it expects to lose 4 cents a share excluding special items in the current quarter, in line with current analysts' forecasts.

It said it should meet or slightly exceed the $6.4 million revenue target for the quarter, which is down from the $7.5 billion in revenue it posted a year earlier.

Motorola said it expects to see a return to profitability in the third and fourth quarter this year despite continued decline in revenue, and that it believes it should earn 4 cents a share excluding special items for the full year, slightly above the 3 cent a share consensus estimate of analysts surveyed by earnings tracker First Call.

The company also said it sees a sales decline of between 5 to 10 percent for the year from 2001 levels, which would bring revenue in the range of $26.5 billion to $28 billion. The First Call forecast is for revenue of $27.1 billion.

Motorola said the job cuts are expected to save $100 million in pretax costs for the remainder of this year and produce annual pretax savings of $700 million by 2003. Job cut costs are expected to account for a charge of $1.9 billion.

Another $1.1 billion in charges is related to the company lowering market valuations of its investments and other assets, and a final $530 million in charges comes from writing-off long-term financing receivables from its loans to Turkish cellular service operator Telsim that remain in default .

The company said it will take more than 90 percent of these charges in the second quarter.

Shares of Motorola (MOT: Research, Estimates) slipped 3 cents in pre-market trading on Instinet to $14.01 following the announcement after closing Wednesday trading down 24 cents.  Top of page






  graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.