Google (NASDAQ:GOOG) said that its Motorola Mobility subsidiary will slash around 4,000 jobs, or 20 percent of its workforce. The move comes just three months after Google's $12.5 billion acquisition of Motorola closed.
Google revealed the job cuts in a filing with the Securities and Exchange Commission, and said that two-thirds of the cuts are expected to come from outside the United States. The search giant also said that "Motorola plans to close or consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio—shifting the emphasis from feature phones to more innovative and profitable devices."
The job cuts, while stark, are not entirely unexpected. Google executives have emphasized that the company would be focused on a slimmer portfolio of devices than it had in the past. Google has also taken steps to reshape Motorola--40 percent of tis former vice presidents are gone and the company plans to move from its longtime quarters in Libertyville, Ill., to a new office in downtown Chicago's Merchandise Mart area
When the deal closed in May, Sanjay Jha stepped down as CEO and was replaced by Google executive Dennis Woodside, who formerly ran Google's advertising sales business in the Americas before taking on the job of overseeing the acquisition in the second half of last year. Several tope executives, including Christy Wyatt, Alain Mutricy and Bill Ogle also left the company.
In the filing Google said it expects to incur a severance-related charge of $275 million in the third quarter and that it would also likely have to take on other restructuring charges. Google did not say how much those other charges would be but noted that they could be "significant."
The changes are being done to "return Motorola's mobile devices unit to profitability," after losing money for 14 of the last 16 quarters, Google said. Google noted that Motorola's revenue will likely be unpredictable for the next several quarters.
"While Motorola expects this strategy to create new opportunities and help return its mobile devices unit to profitability, it understands how hard these changes will be for the employees concerned," a Motorola representative told AllThingsD. "Motorola is committed to helping them through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs."
For Google, the challenge will now be how best to integrate Motorola's hardware business into a software-centric company. Woodside told the New York Times that the company wants to make just a few new devices per year but load them with longer-lasting batteries, better cameras and sensors that can do things like tell who is in a room based upon their voice.
Google provided little insight about Motorola's future inside Google during its second-quarter earnings conference call in July, offering only barebones financial details on the company and a few comments on the company's performance in the quarter.
"We're totally excited about this opportunity," Google CFO Patrick Pichette said at the time. "Everybody should expect some changes at Motorola." However, he repeatedly said that Google has "nothing to announce yet" on Motorola. "It's a little too early to comment on big changes right now," he said.
On Motorola's financials, Google said Motorola revenues clocked in at $1.25 billion ($843 million from the mobile segment and $407 million from the home segment). Motorola's operating loss was $233 million in the quarter ($192 million for the mobile segment and $41 million for the home segment).
For more:
- see this SEC filing
- see this NYT article
- see this Bloomberg article
- see this AllThingsD article
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