Motorola To Lay Off 20% Of StaffMountain View, Calif. – Google will cut 4,000 employees from Motorola Mobility’s workforce of about 20,000 employees to return the phone maker to profitability, Google announced in an SEC filing. 8/13/2012 09:46:19 AM Eastern
The document said about two-thirds of the reductions will occur outside the U.S.
Motorola Mobility, purchased by Google in May for $12.5 billion in part for its patent portfolio, posted losses in 14 of its past 16 quarters.
In a New York Times report, Motorola chief executive Dennis Woodside said the company plans to leave unprofitable markets, exit the low-end device market, and focus only on a few cellphones instead of dozens.
Google expects to post a severance-related charge of up to $275 million, most of which is expected to be recognized in the third quarter. Google also said it expects to incur "other restructuring charges" related to the layoffs and would say only that the charges "could be significant." Google also warned of “significant revenue variability for Motorola for several quarters" because lower expenses will probably lag behind an immediate drop-off in revenue.
In its filing, Google said it plans to "simplify Motorola's mobile product portfolio” by “shifting the emphasis from feature phones to more innovative and profitable devices.
“While we expect this strategy to create new opportunities and help return Motorola's mobile devices unit to profitability, we understand how hard these changes will be for the employees concerned,” a Motorola spokesperson said. “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."