Motorola cutting 4,000 jobs

Electronics maker zeroes in on devices division; says cost-cutting measures could save $1.5 billion in 2009.

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By Kenneth Musante, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Electronics maker Motorola said Wednesday it will be cutting 4,000 jobs this year in an attempt to cut costs. The new job cuts follow the announcement of 3,000 job eliminations in late 2008.

About 3,000 of the newly announced cuts will come from Motorola's Mobile Devices division, which has been under pressure from plummeting mobile phone sales. The rest will come from corporate and business divisions, according to Motorola.

Motorola's Mobile Devices division shipped about 19 million units during the fourth quarter, the company said, which is down significantly from the 40.9 million units reported shipped during the same period a year ago.

"They're losing so much money in handsets that they're facing negative cashflow in 2009 for the entire company," said Edward Snyder, principal analyst with Charter Equity Research.

With the slowdown in the global economy, profit from Motorola's other businesses are no longer enough to sustain the weight of the company's money-losing handset division, according to Snyder.

Motorola said it expected to report a loss of between 7 cents and 8 cents a share on sales of between $7.0 billion to $7.2 billion for the fourth quarter. Losses will include restructuring charges, as well as investment losses. The company said it would announce its fourth-quarter earnings on Feb. 3.

Chances that Motorola's mobile division could recover are "small but fleeting," said Snyder.

Motorola said last month that it was freezing employee pension plans and no longer matching 401(k) contributions. The company also froze the salaries of many of its top executives, with co-CEOs John Brown and Sanjay Jha taking a 25% pay cut for 2009.

The new job cuts, along with the other cost-saving measures announced in the fourth quarter, should save the company about $1.5 billion in 2009, Motorola (MOT, Fortune 500) said.

Motorola announced early last year that it intended to spin off its Mobile Devices business, but has not announced any potential buyers. To top of page

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