Moto announces further cost cuts

Troubled US vendor Motorola tightened its belt yet further on Wednesday, announcing cost cutting measures over and above the $800m promised in savings in October.

The company announced plans to permanently freeze its US pension plans, and temporarily suspend all company matching contributions to the Motorola 401(k) Plan.

The majority of employees will not receive a salary increase in 2009, and head honchos Greg Brown and Sanjay Jha will voluntarily take a 25 per cent decrease in base salary.

Brown will also forgo any 2008 cash bonus earned under the Motorola incentive plan, while Jha’s bonus will also be reduced by an amount equal to Brown’s forfeited bonus and the remainder will be taken in the form of restricted stock units.

Net loss for the third quarter plummeted to $397m, compared to a profit of $60m in the same period last year and completely blotting out the hope offered by the $4m earned in the second quarter of this year.

Net sales slumped to $7.48bn, from to $8.8bn last year, also negating a little rally in the previous quarter.

Predictably the Mobile Devices segment was the albatross around co-CEO and handset chief Jha’s neck, with a whopping operating loss of $840m, compared to a loss of $248m a year ago. Handset sales were also down 31 per cent to $3.1bn.

The company shipped 25.4 million handsets, a far cry from the 37.2 million shifted in the third quarter of 2007, but Jha has a plan to fix this. The good news is that Moto will consolidate its handset platforms and revise its portfolio. The bad news is the organisation will be even leaner, which probably means more job cuts.