Double trouble for Motorola

Motorola, the world's second-largest mobile phone handset maker, would cut 3,500 jobs, about 5 per cent of its workforce, in an effort to bolster plunging margins amid a bruising price war.
Ed Zander, the group's president and chief executive, said that the move would save the company about $400 million (£203 million) over two years. He did not immediately elaborate on where the cuts would be made.
The announcement came after Motorola reported that fourth-quarter profits fell 48 per cent despite of record sales. The slump came after the group offered customers a series of deep discounts in an effort to win market share from market leader Nokia.
In Motorola's handset business, the operating margin plunged to 4.4 per cent in the fourth quarter, from 11.6 per cent in the previous three months. The group shipped 66 million handsets in the quarter, up 47 per cent on the same period a year earlier, to give the group 23 per cent of the global market.
Mr Zander said: "As I said earlier this month, we are disappointed with our fourth quarter operating earnings performance."
The US company had issued a profits warning two weeks ago, sending its shares sharply lower. However, Mr Zander shrugged off suggestions that Motorola should concentrate on delivering profits at the expense of market share.
He said: "There’s no change in strategy. There may be some changes in tactics."
He also dismissed suggestions that Motorola's super-thin Razr phone is running out of momentum. "It’s funny, I keep reading about Razrs being tired," he told analysts. "We sold more Razrs in quarter four than in any quarter we ever had. We now have sold over 75 million Razrs worldwide."
Net profit for the past three months of 2006 was $624 million, or 25 cents per share, down from $1.2 billion, or 46 cents per share, a year earlier.
Revenue was $11.8 billion, up 17 per cent from $10 billion a year ago and in line with analysts' estimates.
The company said it expects sales between $10.4 billion and $10.6 billion in the first quarter, again in line with analysts’ forecasts.
Motorola shares gained 31 cents to $19.02 in morning trading on the New York Stock Exchange.