Motorola freezes salaries in 2009 as it talks up LTE prospects

Motorola yesterday reiterated its strategic plan for 2009, stating that the continued interest in broadband technologies would see the company continue Long Term Evolution (LTE) work, as well as the expansion of WiMAX and Fibre-to-the-home (FTTH) deployments in line with the projected expansion of broadband in 2009. During the course of 2008 Motorola demonstrated the industry’s first CDMA to LTE network handoff, as well as a number of WiMAX and FTTH deployments and products.

Dan Moloney said the company is looking forward to carrying its commitment in LTE into 2009

Despite the current economic landscape, Motorola believes the demand for media mobility points offer the company a myriad of opportunities for its products and services.

“Motorola is committed to broadband and 4G development and made significant gains in 2008, particularly with LTE to address the mobility demands being driven by consumers looking for personalised media experiences,” said Dan Moloney, president, Motorola’s Home and Networks Mobility business. “We’re looking forward to carrying this commitment into 2009 and leading the market in further development and deployment of LTE technologies.”

With respect to WiMAX, Motorola believes it is well-placed in both the nomadic and fixed versions of the technology. The company reported that it already has 25 contracts for commercial WiMAX systems with customers in 20 countries, and has shipped more than 5,000 multi-sector access points (powering more than 17,000 sectors) and hundreds of thousands of CPEs and PC cards as of Q308. The company’s WiMAX business for contract deployments, trials, and other customer engagements is currently engaged in 49 countries.

Motorola’s global WiMAX gains include a US$165 million contract with Saudi Arabia’s Atheeb. Wateen Telecom in Pakistan placed one of the world’s largest WiMAX device orders in 2008, with 198,000 units.

Despite Motorola’s bullish forecasts for the year ahead, the company continues to face significant challenges in the short-term. Earlier this month it announced additional actions to further reduce costs amid continuing global economic challenges.

As part of the overall cost reduction programme, Motorola is revising its employee compensation and benefit programmes. Effective March 1, 2009, to better align with industry norms, Motorola will permanently freeze its US pension plans, preserving vested benefits accrued by employees and retirees but eliminating future benefit accruals. Motorola intends to continue to provide funding to meet its pension obligations to present and future retirees.

Effective January 1, 2009, Motorola also will temporarily suspend all company matching contributions to the Motorola 401(k) Plan. US employees may continue to contribute to the plan but will not receive matching contributions from Motorola.

The company also announced that employees in many of the markets in which it operates will not receive a salary increase in 2009. In addition, Motorola co-chief executive officers, Greg Brown and Sanjay Jha will voluntarily take a 25 per cent decrease in base salary in 2009.

Greg Brown will voluntarily forgo any 2008 cash bonus earned under the Motorola incentive plan. Sanjay Jha’s employment contract provides for a guaranteed cash bonus for 2008. His bonus will also be voluntarily reduced by an amount equal to Greg Brown’s forfeited bonus and the remainder will be taken in the form of restricted stock units.

These actions are expected to lead to cost savings in addition to the US$800 million that was previously announced on October 30, 2008.