The bloodletting has begun at Motorola Mobility, as Google said it plans to cut 4,000 jobs in an attempt to reenergize Motorola’s bottom line.
Google said in a recent 8-K filing that Motorola Mobility would reduce its head count by approximately 4,000 employees out of a total of 20,000. Two-thirds of the job cuts will take place outside of the United States.
Motorola also said it would close or consolidate about one-third of its 90 facilities, as well as shift its emphasis from phones “to more innovative and profitable devices.”
“These changes are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters,” the company wrote in its filing. “That said, investors should expect to see significant revenue variability for Motorola for several quarters. 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 understands how hard these changes will be for the employees concerned and is committed to helping them through this difficult transition. Motorola will be providing generous severance packages, as well as outplacement services to help the employees find new jobs.”
In the filing, Google said it expected to incur a severance-related charge of no greater than $275 million, which it believes would be largely recognized in the third quarter, with the remaining severance-related costs recognized by the end of this year. Google is also expected to incur other restructuring charges related to the layoffs and restructuring, the majority of which will be recognized in the third quarter.
Google closed on its $12.5 billion deal to buy Motorola in May. Since then, there have been rumors that Google planned to sell off Motorola’s Home division, which provides cable modems, cable modem termination systems, set-top boxes and other equipment and solutions to cable operators. Speculations on a sale were fanned when former Charter Communications CTO Marwan Fawaz joined Motorola as executive vice president of the company’s Home division in June.
Motorola’s filing didn’t say whether the job cuts would include its Home division. In a story today in The New York Times, Dennis Woodside, Motorola’s new chief executive, said Motorola would cut the number of devices that the company makes from 27 last year to just a few. The Times story said that Motorola has shed 40 percent of its vice presidents since Google took over.
While it remains to be seen what Google will do with the Home division, the uncertainty is no doubt playing favorably into the hands of rival Cisco, which will report its fourth-quarter results after the market closes on Wednesday.
