Google is laying off 4,000 workers in its Motorola Mobility unit, or about 20 percent of its 20,000-member workforce, just three months after acquiring the company for $12.5 billion in May.
The job cuts, which will also include about 30 Motorola facility closings, were announced in a Form 8-K filing with the U.S. Securities and Exchange Commission (SEC), according to the document. Although the document is dated Aug. 3, the filings were released Monday, Aug. 13.
“Two-thirds of the reduction is set to occur outside of the U.S.,” according to the document. “In addition, 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 cuts are being made to try to reverse financial losses in the Motorola unit, which has lost money in 14 of the last 16 quarters, Google reported in the filing. “That said, investors should expect to see significant revenue variability for Motorola for several quarters,” according to the filing. “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,” according to the documents. “Motorola will be providing generous severance packages, as well as outplacement services to help the employees find new jobs. Google expects to incur a severance-related charge of no greater than $275 million, which it believes will be largely recognized in the third quarter, with the remaining severance-related costs recognized by the end of 2012.”
As part of the Motorola shake-up, Google is also cutting about 40 percent of the vice presidents in the Motorola unit, according to a report by Bloomberg News.
In July, Google gave its first revenue report since officially acquiring Motorola Mobility, posting second-quarter revenue of $12.21 billion, which is a 35 percent increase from $9.03 billion in the second quarter of 2011. The company released its fiscal 2012 second-quarter results July 19. The quarter ended June. 30
The $12.21 billion second-quarter revenue was up 15 percent from the first quarter of the year, when Google reported $10.65 billion in revenue, according to the company. GAAP (generally accepted accounting principles) net income reported in the second quarter of 2012 was $2.79 billion, compared with $2.51 billion in the second quarter of 2011.
Much of the value in the purchase of Motorola was fueled by Google’s desire to bolster its own patent portfolio by bringing in Motorola’s estimated $5.5 billion worth of patent holdings.
Those patents are seen by Google as assisting the company as it expands its reach into mobile hardware and services around the world, according to a recent SEC filing.
“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies,” Google CEO Larry Page explained in a corporate blog post.
Also earlier in July, Google announced a schedule that continues its efforts to cut and consolidate some of its less popular products used by customers, including the Google Mini enterprise search appliance, the iGoogle personalized home page and several other Web-based services. The cutbacks are part of the Google services overhaul that began last September.