Cable Operators

Google To Slash 4,000 Motorola Jobs

8/13/2012 6:18 AM Eastern

Looking to drastically streamline operations, Google will lay off about 20% of Motorola Mobility's workforce -- eliminating about 4,000 jobs, the Internet giant said in a regulatory filing Monday.

Google also is closing about a third of Motorola's 94 offices worldwide. As of the end of June, Motorola Mobility had 20,293 employees. Approximately one-third of the job cuts will be in the U.S.

In May, Google closed the $12.4 billion cash acquisition of Motorola Mobility, driven largely by Google's desire to obtain the latter's patents. The Internet company valued Motorola's 17,000-plus patent portfolio at $5.5 billion, representing the largest component of the price tag.

The layoffs are designed to return Motorola's mobile devices unit to profitability, Google said in an 8-K filing, after the unit lost money in 14 of the last 16 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," Google said.

"Motorola understands how hard these changes will be for the employees concerned and is committed to helping them through this difficult transition," Google said in the filing. "Motorola will be providing generous severance packages, as well as outplacement services to help the employees find new jobs."

Google expects to incur a layoff-related charge of no more than $275 million, most of which it expects will be recognized in the third quarter with the remainder recognized by the end of 2012.

Google plans to phase out Motorola's unprofitable and low-end devices and focus on just a few cellphones, Motorola CEO Dennis Woodside, previously president of Google's Americas region, said in an interview with The New York Times.

"The Google business is built on a wired model, and as the world moves to a pretty much completely wireless model over time, it's really going to be important for Google to understand everything about the mobile consumer," Woodside said.

Google bought Motorola primarily for the mobile side of its business. Through its Home unit, Motorola is a major supplier of set-tops, cable modems and other hardware and software to cable operators and service providers. Google has been rumored to be prepping Motorola's Home unit to be spun off or sold -- speculation that started a year ago when Google announced its initial takeover offer.

In late June, Google hired  Marwan Fawaz, previously chief technology officer of Charter Communications, as executive vice president of Motorola Mobility's Home unit. Motorola Mobility president Dan Moloney resigned to pursue other opportunities, the company said.

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