Struggling cellphone maker Motorola Inc. is expected to slash more jobs in addition to the 3,500 layoffs it announced earlier this year, several analysts said.
In a Tuesday lunch meeting with analysts in New York, Motorola CFO Thomas Meredith indicated the company “would announce additional downsizing and restructuring,” most likely on May 30 or 31, according to a research note Tuesday from Todd Koffman, an analyst with Raymond James & Associates Inc. in Tampa, Fla.
Koffman wrote that Schaumburg-based Motorola would target cost savings “at least as large” as the $400 million the company cited when it announced 3,500 layoffs in January.
A Motorola spokeswoman said Meredith did not announce any new cost-cutting initiatives Tuesday, but the company expects to publicize further cost-cutting plans near the end of the quarter.
In a note Wednesday, Michael Ounjian, an analyst with Credit Suisse in New York, wrote that Meredith “clearly indicated” that the prior cost-cutting plans “would not be sufficient to meet operating targets.”
Meredith said the company would make public further details of the cost-cutting moves by June 1, Ounjian wrote.
Another analyst, T. Michael Walkley of Piper Jaffray & Co. in Minneapolis, wrote in a research note that “we believe another layoff is imminent,” according to Bloomberg News.
This year has been somewhat of a nightmare for the once high-flying Motorola, the world’s No. 2 cellphone maker. The company’s stock has fallen 13% since the beginning of the year, and nearly a third since October.
After announcing the jobs cuts in the first quarter, Motorola posted its first operating loss in nearly five years. Then the company had to fight a proxy battle against activist investor Carl Icahn, who recently lost his bid for a seat on the company’s board. And the company has fallen further behind the world’s top cellphone maker, Nokia, in its quest for market share.
All of the problems have been underscored by gripes that Motorola has failed to produce a compelling follow-up to its mega-hit phone, the Razr, which was launched in November 2004. A glitzy New York media event Tuesday, in which the only product the company announced was a new and improved Razr, will likely do little to quiet critics, some of whom have called for CEO Edward Zander’s job.
Meredith, a former CFO with computer maker Dell Inc., took over as Motorola’s CFO in March. He’s been a member of Motorola’s board of directors since 2005.
Brandon Glenn is a reporter with Crain’s Chicago Business, a sister publication to RCR Wireless News. Both publications are owned by Crain Communications Inc.
