Motorola's ( MOT) employee cuts have taken a deeper-than-expected slice out of its ailing phone business. In an effort to shrink costs as fast as its phone sales have been declining, Motorola has cut 500 more workers than the 7,000 it originally planned for the past two quarters. In a filing Monday, Motorola said first-quarter employee cuts would be 5,600. That total, combined with 1,900 workers cut the fourth quarter, gives Motorola a two-quarter staff cut of 7,500 jobs. "In January we targeted a total cost reduction goal of $1.5 billion, and we'd like to exceed that," said a Motorola representative. Most of the cuts have been in the company's sagging phone business. Motorola fell from the third largest phone maker to the No. 5 player last year as the company failed to produce popular devices. Meanwhile, players like Apple ( AAPL), Research In Motion ( RIMM) and Samsung gained ground by riding the touchscreen smartphone trend. Deeper cuts in the first quarter are an ominous sign that sales have not stabilized. But some analysts see the move as an encouraging signal that Motorola is still fighting to lift the business out of red ink. "We at least feel more comfortable knowing the company remains flexible enough to keep the cost cutting on pace with top line," JPMorgan analyst Ehud Gelblum wrote in a note Tuesday. Motorola hired Sanjay Jha last year to turn its phone business around. Jha's plan, in large part, is to align Motorola's new smartphones with Google's ( GOOG) Android operating system. The Android-powered phones would target the middle range of the market.
Motorola shares were down 19 cents, or 4%, to $4.50 in mid-morning trading Tuesday.