Motorola Separation Leads To Layoffs

In the wake of the announcement that it plans to split its Mobile Devices and Broadband & Mobility Solutions divisions into two separate businesses, Motorola has laid off several engineers, some working on research and development of mobile devices.

According to the communications technology giant, the layoffs affected research and development employees and research and development support groups at Motorola's engineering facility based in Plantation, Fla. The vendor confirmed the layoffs on Thursday, but would not provide a specific number of employees affected.

"Motorola confirms that as part of its strategic review of business operations, which includes a previously announced $500 million cost-reduction initiative, the company has implemented workforce reductions aimed at making financial resources available for strategic business investment, while better aligning operational costs and expenses with business growth," a Motorola representative said in statement emailed to ChannelWeb.com.

"Eligible affected employees are being provided with severance packages and outplacement support," the statement continued. "The company anticipates filing an 8K next week."

While Motorola wouldn't confirm the number of employees laid off, sources told ChannelWeb that 350 engineers in the Plantation facility were let go. It was unclear Thursday if more were affected.

Motorola said the Plantation facility houses several operations branches, including mobile devices, government and public safety and home and network mobility divisions.

The goal of the layoffs, Motorola said, is to help position Motorola for sustained future growth.

"We're continually evaluating opportunities for increased efficiencies and cost savings so further cost saving measures will be announced as opportunities are identified," said Paula Thornton-Greear, a Motorola spokeswoman.

The layoffs came the same day the Schaumburg, Ill.-based vendor announced that it is spinning off its struggling Mobile Devices business, which had come under fire from shareholders for underperformance and poor leadership.

In a conference call Wednesday morning, Motorola CEO Greg Brown said the decision to split Mobile Devices and Broadband & Mobility Solutions into two separate, publicly traded companies came after an evaluation of structural and strategic realignment of its businesses to create better success for both independent arms.

Motorola's Mobile Devices business has been struggling of late, in the final quarter of last year, Motorola told investors that net profit was down 84 percent and sales of mobile phones fell 38 percent. Conversely, rivals like Samsung and Nokia continued success.

The hunt is now on for a CEO to head up the Mobile Devices business, Brown said. He said he hopes the spinoff will help Motorola capture the success in the device market that it had when it introduced the widely popular Moto RAZR and the Motorola Q smartphone just a few years ago.

"We expect this action to enhance the pace of recovery in Mobile Devices, to pave the way for its return as a leader in its industry, to accelerate our efforts to attract a new leader and to create shareholder value," Brown said in the conference call.

The split came just days after Carl Icahn, Motorola's second-largest shareholder filed a lawsuit requesting documents pertaining to the ailing Mobile Devices division. Icahn chastised Motorola for poor leadership said the device business has "gone from bad to worse" and has become a "stockholders' nightmare."

Icahn's suit demands that Motorola turn over records pertaining to the struggling Mobile Devices business and documents detailing the use of a corporate jet by top Motorola executives and their families. Icahn claimed the devices business was lagging due to poor guidance by the board of directors. He requested documents that offered insight into the direction of the devices business.

"Over the past 12 months the statements and predictions of Motorola's management and the Board about the Mobile Devices business have too often proven to be wrong," Icahn wrote in a statement. "We want to ascertain what the board could have done in the exercise of its fiduciary duty to assure Motorola stockholders that Motorola's statements and predictions were not incorrect and would not provide Motorola stockholders with an inaccurate perspective on the prospects for the Mobile Devices business."