The old saying cuts sharp but true: A recession is when your neighbor loses his job. A depression is when you do. Suffice it to say that a lot of tech workers are feeling mighty depressed right about now.
Recent weeks have seen layoffs at Hewlett-Packard (NYSE:HPQ), Oracle (NASDAQ:ORCL), Akamai (NASDAQ:AKAM), and Yahoo! (NASDAQ:YHOO). This morning's Wall Street Journal predicts a "significant" reduction in force is coming to Microsoft (NASDAQ:MSFT) as early as next week. Why, even Google (NASDAQ:GOOG) is shedding 100 recruiters.
So it probably comes as no surprise that one of the biggest disappointments in tech-land, Motorola (NYSE:MOT), is hopping aboard the layoff wagon for another go-round. Yesterday, Motorola offered up 4,000 of its employees as sacrifices in atonement for what looks to be an awful fourth quarter. Management warned us to expect revenues of about $7.1 billion, or a 25% drop year over year. And yes, Motorola's planning to lose money to boot. $0.07 a share on the better end of their guidance. (And at worst? Motorola will get back to you on that, just as soon as it finishes tallying up "impairment ... of long-lived assets, including goodwill, or finalized income taxes.")
But back to the layoffs
As you might expect, the ax is falling hardest on Motorola's unprofitable "mobile devices" division (henceforth called MD), home of the RAZR cell phone and ... honestly, I can't think of a single other buzzworthy product that's come out of there in years. Combined with the 3,000 layoffs announced last quarter, and additional "cost-reduction initiatives," Motorola expects to shave $1.5 billion off its 2009 operating costs, with MD accounting for $1.2 billion of the savings.
$1.2 billion? Why does that number sound familiar?
Interestingly, $1.2 billion just happens to be the size of the operating loss that MD posted in fiscal 2007. However, by the time 2009 is finalized and these potential savings are realized, MD will probably be even further in the red.
According to Bloomberg, the company lost its top ranking in the U.S. mobile-phone market during the third quarter. Its market share has slipped an astounding amount, from 32.7% a year before to 21.1% in the third quarter of this year. It's not like Motorola expects to reap the rewards of fixing its mobile devices division: Last year, management told us plain as day that they plan to sell the MD shop in 2009.
However, with the company hemorrhaging market share at an unsustainable clip, the Foolish investor has to wonder whether the mobile division can reach a point where it can be successfully spun off. Especially when one considers that it just lost a sizable portion of its workforce.
More Foolishness on Motorola:
- Get our latest status report on Motorola
- Get the lowdown on Motorola's spinoff plans (such as they are)
