CHICAGO – Motorola Inc. said Thursday it is eliminating 2,000 more jobs as a result of the continuing slump in the telecommunications equipment industry, bringing its cuts to more than 20 percent of its work force since last December.
The company, mired in a long slump, said softer-than-expected demand for telecom equipment has resulted in sales being flat in the third quarter rather than up 5 percent as anticipated.
The announcement sent its shares plunging $2.48, or 15 percent, to $13.92 Thursday afternoon on the New York Stock Exchange.
Motorola blamed "slower growth in the wireless infrastructure market, resulting from delays in capital expenditures by wireless service providers."
The cuts will come from the company's Global Telecom Solutions Sector, which handles cellular phone network development and manufacturing. That business, based in Arlington Heights, Ill., has facilities in Texas, Arizona, Florida, Canada, Brazil, Britain, Israel, China, Ireland, Japan and India.
Specific jobs and locations have not yet been identified, Motorola spokesman Scott Wyman said from company headquarters in Schaumburg, Ill.
The moves bring Motorola's total announced job cuts to 32,000 since last December, shrinking the work force to 115,000 by year's end.
The announcement came just hours before Robert Growney, Motorola's president and chief operating officer, was due to update financial analysts in New York on the company's performance.
Growney said in a statement that the company expects to report an operating loss of 5 cents to 8 cents per share in the third quarter, including pro forma adjustments. Wall Street's latest estimate is for a per-share loss of 5 cents.
That will make four straight money-losing quarters for Motorola, which said the pending loss will be smaller than the $232 million operating loss of the second quarter.
Growney cited increased sales and improved profitability in the cellphone division, Motorola's biggest business, but added: "All other segments of the company are expected to experience sequential declines in sales and profitability."
The semiconductor unit, the company's No. 2 in size, is suffering from weaker sales and profitability this quarter, he said, although orders are higher.
Motorola, the leading U.S. cellphone maker, is in the middle of its third restructuring since 1998 as it tries to improve sagging profit margins and close the huge gap between it and industry front-runner Nokia. It improved its market share to 14.8 percent from 12.7 percent in the second quarter, according to Gartner Dataquest research, but the weakened economy has weighed on its comeback efforts.
Analyst Vivian Mamelak of Arnhold and S. Bleichroeder said the latest setback reflects industry woes rather than Motorola misdoings.
"There's gloom and doom going on out there in telecom equipment," said the analyst, who called the announcement unsurprising.
"Any hope for a second-half rebound is pretty much out the window right now," she said. "Even for '02, there doesn't seem to be a heck of a lot of light at the end of the tunnel."