Google Inc. (GOOG) is cutting about 20% of Motorola Mobility's work force, a move the phone maker said is designed to return its mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters.
Motorola will shave 4,000 positions of a total of about 20,000. Two-thirds of the reductions will take place outside the U.S. In addition, Motorola plans to close or consolidate about 30 of its 90 facilities. The company said in a filing with the Securities and Exchange Commission that it will "shift its emphasis from feature phones to more innovative and profitable devices."
Google bought Motorola Mobility through a $12.5 billion deal in May and has said purchasing the wireless phone maker was about more than simply gaining access to its broad portfolio of patents. Motorola already produces a number of phones and tablets based on Google's Android mobile software.
Monday, Google said it expects to incur a charge of no greater than $275 million related to the cuts, which will likely be largely recognized in the third quarter. The remaining severance-related costs recognized by the end of 2012. The search-engine giant said the majority of other restructuring charges will be recognized in the third quarter and that these could be "significant."
Google warned Monday that "investors should expect to see significant revenue variability for Motorola for several quarters." It added that while lower expenses are likely to lag the immediate negative impact to revenue, it sees these actions as a key step for Motorola to achieve sustainable profitability.
About two weeks ago, the company revealed that Motorola would move its Libertyville, Ill., facilities into downtown Chicago's Merchandise Mart building. On Monday, Google said its subsidiary would provide employees with "generous severance packages," as well as outplacement services.
Google has made a number of leadership changes since it closed its acquisition of Motorola, but has yet to go into detail on its product strategy, beyond saying it expects to focus on fewer products.
Former Chief Executive Sanjay Jha left when the deal closed, as did top executives Christy Wyatt, Bill Ogle, John Bucher and Juergen Stark, among others. New leaders include Motorola unit head Dennis Woodside and former Defense Advanced Research Projects Agency chief Regina Dugan, who joined Google in March and will lead an advanced technology group within Motorola.
Google's shares climbed 1.6% to $651.94 in recent premarket trading. The stock is up 14% in the past year.
Write to Saabira Chaudhuri at email@example.com