Motorola Reportedly Close To Major Restructuring

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Motorola Reportedly Close To Major Restructuring

The handset division is reportedly set to lay off nearly half its workers, and the smartphone line will focus on Google's Android platform.

By Marin Perez
InformationWeek
January 13, 2009 07:41 PM

Motorola (NYSE: MOT) has been steadily losing market share to Apple, Nokia (NYSE: NOK), and Research In Motion (NSDQ: RIMM), and the company may be making massive cuts to its workforce to stem costs, according to a report from Phone Scoop.

"Phone Scoop has learned that Motorola's handset division is expecting a large round of layoffs as soon as this week, according to someone familiar with Motorola's plans," the site said. "The layoffs are confirmed to be significant and may amount to 50% of the entire handset operation. Motorola's set-top box, networking equipment, and enterprise device businesses would not be affected."

The company responded to press inquiries regarding the cuts, saying it does not respond to rumors. But it's no secret that the handset division has been ailing, as it has lost nearly $2.8 billion since the start of 2007. The company has previously made worker reductions and it has trimmed benefits to prepare for an economic downturn.

Motorola is still struggling to find a replacement for its massively popular Razr cell phone, which sold more than 110 million units around the world. But since that iconic device, the company is largely seen as having a stagnant portfolio of handsets. It recently brought in Sanjay Jha to help resurrect the handset division, and Jha has said the company can recover by streamlining its portfolio and producing desirable products.

"Motorola is prepared to trim the number of new phones it brings to market down to just a dozen per year, and the only smartphones it will produce will be based on Google's Android platform," the report said.

The company did not confirm this aspect of the report either, as it remained committed to its previous announcement that it would use Android for midtier devices and use Windows Mobile for high-end smartphones. Motorola's Android handset is expected to have heavy social networking integration, and Jha said it should come out in the second quarter of 2009.

ve heavysocial networking integration, and Jha said it should come out in the second quarter of 2009.