Google is to lay off 20% of the Motorola Mobility workforce with 4,000 redundancies worldwide, two-thirds of that...
number coming from outside the US.
The company said it intends to ditch its standard phones as part of the move. "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," it said in a filing to the Securities and Exchange Commission.
"These changes are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters," added the statement. Google said it expects to incur severance-related charges of $275m (£175m), as well as restructuring charges.
The news follows Google’s acquisition of Motorola Mobility for £7.65bn in August 2011.
Dale Vile, founder of analyst firm Freeform Dynamics, said significant cuts were inevitable as Motorola becomes more integrated with Google.But he said the acquisition centred on Motorola’s patent portfolio, rather than a deliberate move into the hardware space.
“There are two possible outcomes for Google – ultimately it will either sell off Motorola’s hardware manufacturing business or it will do what Microsoft is doing with its Surface tablet and establish a reference platform. But Google is probably beyond that as Samsung and HTC are already doing a great job using Google’s Android operating system," said Vile.
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"To be brutally honest it’s probably not in Google’s interest to compete with Samsung and HTC in a big way. It’s a difficult one to manage as a business, so it probably needs to keep the Motorola division as a tactical operation and under control so it doesn’t undermine its equipment manufacturers.”
A Google spokesperson said: "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. 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."