Motorola to cut 7,000 jobs in cellular operations

Cell phone major Motorola has announced the cutting of an additional 7,000

jobs in the cellular phone operations, bringing the total number of workers to

be laid off in the past three months to 12,000. This is in addition to the 4,000

semiconductor workers who were laid off last month.

The latest cuts are expected to reduce Motorola's cell phone operations staff

by 36 percent from staffing levels a year ago. "Unfortunately, this was a

necessary next step for us to achieve renewal and stay competitive in today's

dramatic business environment, particularly given the current slowdown in the

economy," said Motorola Personal Communications sector president, Mike

Zafirovski. "Despite an anticipated slower growth, we will continue to

adapt our overall cost structure, work force and production levels to a more

competitive business mode," he added.

The latest announcement came just hours after rival Ericsson said it would

suffer a first quarter loss of $500 million. Earlier the company had projected a

break-even period. The cell-phone industry is trying to overcome a triple doze

of negative



business developments have cropped up unexpectedly in the first quarter,
including a poorly performance of the US economy, lower customer demand and high

inventory levels.

In addition, Motorola and Ericsson have also been affected by Nokia's

aggressive price cutting in the low-end side of the market, which accounts for

2/3rds of sales but where the two firms have struggled to compete. Projected

global cell-phone sales for the industry in 2001 have slowed drastically, from a

forecast of 600 million units earlier this year to fewer that 500 million units,

according to a forecast from Motorola last month.