Struggling Motorola is including about 120 top executives in layoff

January 09, 2002|By BLOOMBERG NEWS

SCHAUMBURG, Ill. - Motorola Inc., the second-largest maker of mobile phones, will fire about 20 percent of its top 600 executives this quarter as the company eliminates almost a third of its work force over two years.

Chief Executive Officer Christopher B. Galvin decided to make the cuts because the company "can't justify the number of executives we have in our ranks," spokeswoman Margot Brown said.

The number of top managers, with titles of vice president or higher, had been constant through a sales decline. Motorola is reducing its work force by 32 percent, or by 48,400 employees - 42,900 jobs through layoffs and 5,500 through sales of businesses - from a peak of 150,000 in August 2000 because its sales fell 18 percent in the first nine months of last year.

The executive firings are part of 9,400 job cuts announced last month by the company, which expects to post a loss for 2001.

Brown said the fired managers will come from all divisions and are among the highest paid at the company. "It's fair to say that everybody needs to share in the pain, and we're recognizing that," she said.

"Management hasn't felt it as much," said Tom M. Carpenter, an analyst at Hilliard Lyons Inc., who rates the stock a "hold" and doesn't own the shares personally. The cuts may also give the company a chance to hire "new blood" if and when sales rebound, he said.

Motorola shares fell 37 cents yesterday to close at $14.80. They fell 26 percent last year.

The reductions are being made as part of a plan to return the company to profitability this year.

Motorola's forecast to earn 15 cents a share in 2002 has failed to convince most analysts and investors, who were stung by a series of missed targets in 2001. Analysts have predicted a 4-cents-per-share profit this year.

Motorola, based in Schaumburg, Ill., said last month that it would save $865 million in 2002 by cutting 9,400 more jobs, or 8.5 percent of its work force.

Motorola President Edward D. "Ed" Breen Jr., who took over the job Jan. 1, "had a large part in the decision-making process" for the management cuts, said Carpenter, the Hilliard Lyon analyst.

When asked about Breen's role, Brown said that "this is a Chris Galvin decision."

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