London/Los Angeles: Barclays PLC said Wednesday it plans to cut up to 2,100 jobs in its retail and commercial banking units, adding to redundancies of the same size in its investment banking arms announced Tuesday.
Mobile handset maker Motorola Inc. also said on Wednesday that it will cut 4,000 more jobs in 2009, in addition to 3,000 it announced in October.
Barclays said it is has begun discussions with union leaders over the new layoffs and will take "all possible measures" to reduce compulsory redundancies by redeploying staff and releasing contractors.
"Barclays continually reviews its operations and resources so that they function efficiently as business needs and customer requirements evolve," the bank said in a statement. "In the current market conditions, this is particularly important."
The bank is already cutting 2,100 jobs in its investment banking, fund management and private banking units in response to the global economic downturn. Those cuts were to ensure the Barclays Capital, Barclays Wealth and Barclays Global Investors divisions were "appropriately sized given the current market conditions," according to Barclays Wealth spokesman Simon Eaton.
News of the cuts weighed heavily on the bank's share price, with the stock dropping 14 per cent to close at 142.1 pence ($2.08) on the London Stock Exchange.
Barclays, Britain's fourth largest bank, employed some 135,000 worldwide at the beginning of 2008.
The global banking sector is shedding jobs at an accelerating rate because of the global credit squeeze. GMAC, HSBC, Commerzbank, Royal Bank of Scotland, Citigroup, Credit Suisse, Nomura, American Express and several other banks have cut tens of thousands of jobs between them since the start of September.
The London-based Centre for Economics and Business Research said 28,000 financial services jobs were lost in Britain last year and expects another 34,000 to be axed this year.
Eaton said on Tuesday that Barclays "will continue to selectively increase those parts of the business that are growing."
The bank is building up its cash equities portfolio after buying the U.S. business of bankrupt Lehman Brothers last September.
Barclays, Britain's fourth-largest bank, last year shunned a government bailout of the banking system that was used by rivals Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC.
Those banks all agreed to cede major stakes to the government in return for a combined 37 billion pound ($55 billion) cash injection from the British Treasury.
Barclays turned instead to Middle Eastern investors, including the Qatari and Abu Dhabi royal families, to raise more than 5 billion pounds.
The market initially welcomed Barclays' decision to remain independent of the government, but investor advisory groups have since questioned whether the government deal would have been better.
In the case of the mobile handset major Motorola's case, the company said from Los Angeles that the move will save about $700 million a year starting in 2009, and total $1.5 billion in annual savings when combined with the previous cut.
Most of the new layoffs will hit the mobile devices business, while about 1,000 jobs are tied to corporate functions and other business units.
The move is the latest in cost-cutting measures by Motorola, which has been struggling to revive its business in recent years. When the cuts are complete, around 12,000 workers will have left the company since December 2007 when there were 66,000 employees, an 18 percent reduction. Last month, it announced it was freezing its pension plans and reducing executive pay.
The Schaumburg, Illinois-based company also said Wednesday it expects revenue for the fourth quarter to be between $7 billion and $7.2 billion, as it saw continued weakness in consumer demand and customer inventory reductions.
Analysts polled by Thomson Reuters expected, on average, $7.5 billion in revenue.
Shipments in the quarter hit around 19 million units, Motorola said. That's down 25 percent from the third quarter — a rare and steep decline for the holiday season — and off a whopping 54 percent from a year ago.
"It's not supposed to happen that way," said analyst Pablo Perez-Fernandez with Global Crown Capital, noting the first quarter is usually weaker than the fourth. "We think that things get worse for Motorola before they start getting better."
The company also said it expects a fourth-quarter net loss from continuing operations between 7 cents and 8 cents per share, including 6 cents per share of restructuring costs and other charges. The estimate did not include new charges for the layoffs announced Wednesday, which could widen the loss.
Analysts were looking for a profit of 3 cents per share.
"The actions we are taking today in our mobile devices business will allow us to further reduce our cost structure, and positions us for improved financial performance in 2009," said Motorola's co-chief executive, Sanjay Jha, in a statement.
Motorola shares fell 21 cents, or 4.9 percent, to close at $4.11 Wednesday, and were unchanged in after-hours trading following the announcement. The shares have lost more than 70 percent of their value since this time last year.
Douglas Ireland, an equity research associate at JMP Securities, said the company has failed to duplicate the success of the Razr phone, which came out in 2005, and is having continuing difficulties organizing a comeback.
The latest in its series of products, an iPhone look-alike with a touch-sensitive screen, the MotoSurf A3100, was unveiled at the International Consumer Electronics Show in Las Vegas earlier this month, but it has yet to secure a carrier. The company said it is expected to start selling in Asia and Latin America by March.
In October, the company announced it would cut 3,000 jobs by April, most of them from the cell phone unit, and said it would focus on just three software systems: Microsoft Corp.'s Windows Mobile; P2K, its own system used on the Razr phone; and Android, a free operating system from Google Inc.
Jha said Motorola will have an Android phone by the 2009 holiday season.
"Their new strategy for Android-based phones may be a winner but it is at least two or three quarters from bearing fruit, which is an eternity on Wall Street," Ireland said.
Analyst Edward Snyder, the principal of Charter Equity Research, said Motorola has fallen far since 2006 when it was the No. 2 handset maker behind Nokia Corp.; it's now fighting for fifth place with Sony Ericsson.
He said the company was in a "handset death spiral" where it must churn out new models, even unprofitable ones, to maintain its relationship with mobile phone carriers.
"There's been no handset company that's ever turned it around," Snyder said. "They're down 28 or 30 points in the fourth quarter of the Super Bowl. They can still pull it out, but it's going to be a vastly smaller business than where it started."
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