Motorola Lays Off 3,500, Cites Pricing Problems

Electronics giant Motorola, the number 2 maker of cellphones after Nokia, announced that it will shed 3,500 jobs in a cost-cutting move after overly aggressive discounts trimmed profits. Motorola reported net income of $624M, off nearly 50% from a year ago. The results have led investors to demand a plan to improve margins, partly by reducing discounts but primarily by updating the product line to a point that their handsets can once again command premium prices. The popular Razr cell phone, which has buoyed profits for a couple of years, has fallen from $500-$800 price points to the status of a free promotional item. Aggressive pricing in developing markets also hurt profits.