Motorola faces $101M layoff charge

By Colleen Taylor, Contributing Editor -- Electronic News, 7/6/2007

Motorola Inc.'s recent moves toward plans to cut a total of 7,500 workers have not come without a very tangible price. 

In January, Motorola announced it would cut 3,500 jobs, and, in May, the additional reduction of 4,000 jobs, in a strategy aimed to eventually cut costs for the mobile phone maker. In a filing Motorola made Thursday with the Securities and Exchange Commission, the company said that the 2,100 or so job cuts that it has made so far as part of those plans will result in a Q2 net pre-tax charge totaling approximately $101 million.

The $101 million is comprised of $115 million in charges associated with the layoff actions and $14 million in reversals for accruals from prior periods that are no longer needed, Motorola said.

The majority of the employees affected are located in the United States, Germany, and Canada. Motorola has not finished paying the initially hefty price for its layoff plans. The company said it anticipates that additional severance charges for the remaining actions previously announced, but not yet executed, and the related cash payments for severance benefits will continue through the remainder of 2007.

It is not only cutbacks that are costing Motorola money. The Schaumberg, Ill.-based company has spent comparable amounts of money in recent months to augment its business, as well. In April, Motorola inked a definitive merger agreement to acquire all the outstanding common stock of video processing solutions provider Terayon Communication Systems Inc. at a total equity value of approximately $140 million.