A Shrinking Motorola Wins Big In China

Motorola's $95 million, two-contract deal to supply China Mobile with hardware and services could help reverse Motorola's fortunes.



Two days after revealing that it will eliminate more than 40,000 jobs over the next year, struggling chip and wireless vendor Motorola Inc. says it has won two contracts worth $95 million to supply China's leading operator of mobile phone infrastructure with hardware and services.

Under a deal revealed Thursday, Motorola will deliver its Horizon Systems GSM (Global Systems for Mobile Communications) solution to help China Mobile expand its GSM network in Beijing and Sichuan. The installation is scheduled for completion next fall. Motorola will also install equipment to expand China Mobile's General Packet Radio Service in Beijing.

The deal comes at a crucial time for Motorola, which earlier this week announced a round of job cuts through which it will eliminate 9,400 positions. Those cuts, combined with previously announced layoffs, brings the total number of positions that Motorola will eliminate by next year to 42,900. As of August 2000, Motorola employed about 150,000 workers.

In October, the company reported a third-quarter loss of $153 million compared with earnings of $643 million a year earlier. Sales for the period declined 22%. Earlier this week the company said it expects fourth-quarter sales to be flat compared with a year ago. Motorola is scheduled to report results for the fourth quarter and 2001 on Jan. 22.

Analysts say Motorola's troubles are the result of falloffs in its core semiconductor and telecom businesses. "Those industries are going through the worst slumps anyone has ever seen," says Technology Business Research analyst Bill Lesieur. Lesieur says further headway in China could help reverse the company's fortunes. "The sheer numbers are there," he says. Including the contracts announced Thursday, Motorola has secured deals worth a total of $1.44 billion in China this year.

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