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Motorola accelerates cutbacks and defends WiMAX stand

By CAROLINE GABRIEL

Published: 2 January, 2009

READ MORE: Motorola | WiMAX

Motorola is stepping up the pace of its cutbacks program, in the face of the recession and its own problems, but knows it also has to prove it can generate new products and business to keep the company afloat. For the first half of the year, much of this effort will have to be focused on infrastructure, since the most embattled division, handsets, has an Android-centered turnaround plan that will only see products around midyear.

In the meantime, then, the healthier networks equipment units are seeking to instil confidence that Motorola is still making progress in new markets where there will be significant opportunities even during the downturn, and is pinning its colors on emerging and converged networks - notably WiMAX, LTE and fiber to the home.

According to Dan Moloney, president of the home and networks mobility unit, the company will focus most of its activities on converged broadband and '4G', and will carry out projects in all three of its chosen technology platforms during 2009. The strategy gains some credibility from the dominant position that Motorola has in the newly merged Clearwire operator, the world's most ambitious WiMAX-based mobile broadband plan. The vendor has 25 commercial WiMAX systems running so far, in 20 countries, and has trials and other projects in 49 countries.

And Moloney says LTE tests are progressing very well. "Our testing of LTE networks has demonstrated great forward movement .....we're looking forward to carrying this commitment into 2009 and leading the market in further development and deployment of LTE technologies," Moloney said.

However, the real test for 2009 will be whether Motorola can inject new life into its handset division and resurrect the plan to spin that off, perhaps in 2010. This will require strong implementation of the restructuring program announced last year, and this week, the company said it was accelerating the timeline. It has laid off 400 more employees in the fourth quarter than it had originally intended, incurring additional charges. In October, it unveiled a cost cutting program that included the loss of 3,000 jobs, with 1,500 coming in the fourth quarter. In fact, 1,900 people have now left, though the overall total has not, so far at least, been revised. The plan should save Motorola $800m during this year. Charges associated with the Q4 layoffs will now total $189m rather than $104m.