Motorola is expected to cut 4000 more jobs in the first quarter of 2009, which is in addition to the 3000 jobs that were cut at the end of 2008. Motorola cites falling handset sales, blaming it on the Financial Crisis.
Interestingly enough, Motorola doesn’t want to take any responsibility for the fact that they make an inferior handset. Since the Razor, Motorola couldn’t deliver a good product to the market. Their current line of Razr like handsets look great, but don’t give people what they want in a handset. Sony-Ericson has already surpassed Motorola sales, partially because of their superior Camera-Handsets. Motorola needs to properly assess what people need in a phone, and stop reflecting on the good-ol-days of Razr superiorityMotorola Phones.
This current round of layoffs is moderate compared with what some analysts predict. There are those, like Phonescoop, that estimate that Motorola may layoff up to 50% of their handset workforce. As drastic as this may seem, if the Financial Crisis isn’t settled, this is a viable possibility.
Extreme layoffs like these may mean completely giving up Research and Development, which could devastate Motorola’s ability to compete in todays mobile phone market. Companies such as Motorola need to be careful not to cut too many important workers in order to cut costs. Pleasing investors today at the expense of tomorrow’s profits may not be the best of ideas.
With a third quarter operating loss of $840 million, it is hard to fathom what kind of losses they are seeing at the end of the fourth quarter. Lets just hope that Motorola isn’t another company that collapses in this Financial Crisis.