Google to cut 4,000 jobs at Motorola Mobility

August 14th, 2012 - 3:00 am ICT by BNO News  

MOUNTAIN VIEW, CALIFORNIA (BNO NEWS) — Internet giant Google, Inc. on Monday said it plans to cut approximately 4,000 jobs at telecommunications company Motorola Mobility, which it acquired last year, according to a filing with the U.S. Securities and Exchange Commission (SEC).

Patrick Pichette, Senior Vice President and Chief Financial Officer at Google, said it plans to cut about 20 percent of approximately 20,000 employees at smartphones and tablets developer Motorola Mobility. “Two-thirds of the reduction is set to occur outside of the U.S.,” he said in the filing.

The cuts are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters. Google announced its acquisition of Motorola in August 2011 and the $12.5 billion deal was approved by competition authorities in Europe and the United States earlier this year.

In addition to the layoffs, Pichette said Google plans to simplify Motorola’s mobile product portfolio and shift the emphasis from feature phones to more innovative and profitable devices. The changes will also result in Google closing or consolidating about one-third of Motorola’s 90 facilities.

“Investors should expect to see significant revenue variability for Motorola for several quarters,” Pichette said. “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.”

Monday’s news sent Google’s shares up as much as 2.61 percent, although most analysts said they are unsure if the changes will be enough to return Motorola to profitability.

Pichette said the company expects to incur a severance-related charge of no greater than $275 million, but he warned Google may also incur other restructuring charges which cannot be predicted at this time. “These additional charges could be significant,” Pichette said in the filing.

For the employees affected by the layoffs, Motorola promised to provide generous severance packages as well as outplacement services to help them find new jobs. “Motorola understands how hard these changes will be for the employees concerned and is committed to helping them through this difficult transition,” Pichette added.

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