August 13, 2012
Google Lays Off 4,000 Motorola Employees
Michael Harper for redOrbit.com - Your Universe Online
Google announced plans to acquire Motorola Mobility in May for $12.5 billion in an effort to beef up and rein in their Android smartphones and tablets. In addition, Google was able to arm themselves with Motorola´s folder of patents in any future dispute.
As a part of this acquisition, Motorola was to remain a separate entity and licensee of the Android operating system.
This morning, Google has said they´ll be cutting nearly 20% of Motorola´s workforce, shutting down a third of their offices worldwide. A majority of these job cuts will take place outside of the U.S.
“These changes are designed to return Motorola´s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters,” explains Google in an SEC filing, according to Reuters.
“While lower expenses are likely to lag the immediate negative impact to revenue, Google sees these actions as a key step for Motorola to achieve sustainable profitability.”
Motorola´s 2005 Razr cellphone was a huge hit for the Illinois company and became the standard device for many. Motorola has yet to score another win since this device, however, and as such their stocks and market share have been falling since the Razr lost its original shine.
In an effort to focus the company, turn themselves around and become profitable once more, Motorola has been focusing on smartphones in recent years. According to USA Today, today´s announcement from Google will further this effort, focusing more of the companies resources behind smartphones rather than cheaper “dumbphones.´
As a part of these layoffs, Google also expects to take a severance-related charge of $275 million, which they will see mostly in the third quarter, according to a Reuters report.
Though the Mountain View company said they should have paid most of their severance costs by the end of 2012, additional restructuring costs could be incurred during the third quarter.
Google could not predict the amount of each of these costs, only saying the total could be “significant.”
“Motorola is committed to helping them (the employees) through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs,” explained a Google spokeswoman.
Google purchased Motorola in May with hopes to arm themselves with some additional patents, as well as beef up their hardware offerings as they continue to fight an escalating smartphone and tablet battle with Apple. Though they´ve previously been quiet about how they intended to make Motorola Mobility profitable once more, Google is now explaining their steps to cure the ailing Illinois company.
As a result of these layoffs, Motorola will now focus their research and development offices in Sunnyvale, California, Chicago, Illinois and Beijing.
Google has also downsized Motorola´s management team, separating 40% of the companies vice presidents from the company. Wall Street has already responded to this news in early hour trading, as shares in Google have risen by nearly 2% before trading began on Monday morning.