Motorola to Cut 1,000 Jobs in Productivity Drive

Motorola Inc. (MOT), the world's No. 2 maker of cell phones, Tuesday said it would cut 1,000 jobs in three of its units as it puts its effort behind wireless communications in an increasingly competitive market.

Motorola said the job cuts, which represent 1 percent of its work force, would not mean that its total work force would be reduced. It said it would take a pre-tax charge of $50 million for severance payments, and a separate charge of $80 million for the early repayment of debt.

Motorola said it will make no cuts in its cell phone business, ranked second behind Finland's Nokia (NOK).

The Schaumburg, Ill.-based company said the job cuts will be in the security business, which makes government and commercial systems such as digital two-way radios; the automotive unit, which manufactures navigation systems; and the broadband business, which sells products to the cable industry.

In addition, Motorola is cutting corporate positions that supported Freescale Semiconductor Inc. (search) , the chip unit that it announced last October would go public, spokeswoman Jennifer Weyrauch said. She said most jobs would be eliminated in the third quarter.

"This doesn't mean our work force number is going to go down," Weyrauch said, adding that Motorola is continuing to hire new employees.

Ren Zamora, an analyst with Loop Capital Markets, said the cuts represent Chief Executive Ed Zander's latest efforts to fine-tune Motorola's business, amid a slow recovery in the telecommunications industry after a three-year slump.

"I think broadband will probably take the brunt," said Zamora, adding that the segment did not appear to be doing as well as the rest of the business.

The cuts in the other two divisions are probably "just fine-tuning what are already pretty well run businesses," he said.

Motorola said it would pay severance benefits of $50 million pre-tax beginning in the third quarter and through the first quarter of next year. The $80 million in pre-tax costs related to early debt repayments will be paid in the third quarter.

The company also expects proceeds of $218 million from the sale of shares of carrier Nextel Communications Inc. (NEXT), one of its largest customers.

Motorola shares fell 15 cents to $17.35 on the New York Stock Exchange (search).