SCHAUMBURG, IL -- Motorola will cut 3,500 jobs -- 5% of its workforce -- over the next two quarters amid a nearly 50% drop in quarterly profits.

The cuts will save the company about $400 million over two years, Motorola CEO Ed Zander said.

Motorola currently employs 70,000 workers. The downsizing will take place across the company and will completed in the first half of 2007.

Motorola is the world's No. 2 handset OEM.

While profits at the company stalled in its fourth quarter, revenues are zooming. Zander forecast fiscal year sales of $46 billion to $49 billion, about $3 billion more than Wall Street estimates.

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