Steve Brewton recalls a time when he couldn’t sit down in a restaurant near Motorola’s offices without a stranger spotting his company ID and handing him a resume.
These days, he says, “I’d have a better chance of running into someone who used to work for Motorola than somebody who wants a job there.”
Brewton should know. Until six weeks ago, he was putting in long hours as a manager in a group developing shopping software for Motorola’s cell phones. Motorola recently restructured the unit, about a year after setting it up.
Brewton is among the most recent of 48,000 employees to be laid off during the company’s biggest upheaval in its 74-year history. The Schaumburg company is shedding one-third of its employees while shuttering plants and selling businesses around the globe.
Change is a fact of life in the volatile tech world, and no one–not even Brewton–questions the need to cut costs during a punishing downturn.
Motorola’s $1.05 billion operating loss on $29.45 billion in sales last year was its first such loss since 1930, when it lost $3,700 on $287,000 in sales.
But even after Motorola makes it back into the black–anticipated in the third quarter–bigger challenges lie ahead.
The company Brewton joined was known as Galvin & Co. for its founding family, including third-generation chairman and CEO Christopher Galvin.
Motorola was a global leader in a wide array of businesses, a pioneer with the financial strength and engineering prowess to develop huge new markets such as cell phones and exploit them when they took off.
The company that laid off Brewton is forced to place its bets carefully.
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Chances are slim that Motorola can continue to defend itself against bigger and more focused competitors in multiple businesses–cell phones, wireless networking gear, chips, set-top boxes, mobile radios and more.
At the same time, the deep slumps in the telecom and semiconductor industries complicate the task of selling or spinning off Motorola’s wireless gear and chip businesses.
At stake while the company continues to hack its way to profitability is the company’s legacy as a tech conglomerate.
And Christopher Galvin’s job.
A turnaround has eluded the 51-year-old since he took over five years ago as CEO, when Motorola was losing market share in both cell phones and chips. Two big restructurings failed to fix things. Then came the record-setting dives in the telecom and chip industries–the first time both tanked simultaneously.
Motorola’s stock is down nearly 75 percent from its peak in March 2000, though it’s down less in 2002 than higher-flying competitors Nokia, Ericsson and Nortel.
Wall Street is warming to Motorola and Galvin’s new team, president and chief operating officer Edward Breen and chief financial officer David Devonshire.
Motorola is counting on Devonshire, more outgoing than his predecessor, to sell its story to investors.
Investors are counting on Breen, a blunt hard-charger in contrast to Galvin’s more formal reticence, to make the hard calls about exiting businesses.
Galvin’s weekly e-mails to employees are filled with mentions of Breen, from a recent visit with the pope to inaugurate the Vatican’s new Motorola communications system to his strategy sessions with semiconductor execs.
“The new blood is positive,” says value investor David Katz at New York’s Matrix Asset Advisors. “There’s a new mind-set and an inclination to do things they wouldn’t have done two years ago.”
Employees are less sure.
“Breen is supposed to be the future, but since he’s come in they’ve laid off 50,000 people,” says one. “They’ve compromised what they used to be.”
A company spokesman says Motorola is returning to its core values: respect for employees coupled with high expectations.
We’ll know that’s working when Motorolans come back from lunch carrying strangers’ resumes.
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