Motorola Inc. is facing some serious issues with its cell phone division. With the huge loss in third quarter profits and with its numerous job cuts, the company may be gearing up to cut its losses by spinning off the cell phone division or by selling it.

Analysts have indicated that the downturn for the once mighty cell phone giant may hamper the company’s plan of spinning off the division to generate shareholder interest. If the spin off is not successful the company may have to think about selling off the business unit to survive.

Motorola, this year alone had two rounds of layoffs. The first round took place near the beginning of the year when Motorola laid off 3,500 employees in January. Despite the company’s initial attempt to cut costs, it was decided to cut another 4,000 jobs in June to stave off financial woes.

According to the LA Times, Motorola has yet again announced plans to cut even more jobs by April 2009. The company is said to plan on cutting 3,000 more jobs by April. It is speculated that the company has also talked about selling off it’s cell phone business unit to a competitor, such as Samsung or LG.

A few months ago Richard Doherty, director of consultancy Envisioneering Group, indicated that Motorola may be able to sell the cell phone unit for about $500 million. This is extremely low when considering, Doherty valued the cell phone business unit to be $8 billion almost two years ago.

It is hard to believe that the once iconic mobile phone manufacturer which was well known for its popular Razar, is close to facing its own demise. As if things were not bad enough, many of the executives at Motorola jumped ship to work on Apple’s iPhone a few months back. With one bit of bad news after another, it is hard not to speculate that the company may be on its death throes.

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Entry was posted on Sunday, November 2nd, 2008 at 6:30 pm under Cell phones.

Read more entries by Mike Ferro.
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