Google’s plans for Motorola Mobility will result in the laying off of 4,000 jobs from the handsets and tablet maker, various reports detail.
That means that one in every five employees of the the company Google has just acquired for a whopping $12.5 billion in cash will be out of a job soon.
Furthermore, Google has also announced that it will be shutting a third of the 94 offices Motorola Mobility maintains worldwide as the company undergoes a transformation under the supervision of its new owner.
In a filing with the U.S. Securities and Exchange Commission, Google said that “these changes are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters,” reported Reuters.
“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 added.
Nonetheless, Google will assist Motorola Mobility employees who will lose their jobs, the company has said. They have said that the severance packages for these employees will result in a charge on Google’s third quarter earnings at about $275 million. Furthermore, the company will also help place these laid-off employees in new jobs.
Google wants to transform Motorola Mobility into a profitable business again. Google said that it will do so by cutting the portfolio of devices offered by the company and exiting unprofitable markets. With lesser devices to develop, the company can concentrate more on details for each device. Google has said that Motorola Mobility will also stop developing low-end phones under the company’s new plans.
Motorola Mobility is strategic for Google. Not only will it protect Android with its 17,000-strong patent portfolio, it will also be an avenue for the company to inject more competition in the Android market.
According to Dennis Woodside, the newest Motorola Mobility CEO under Google, the company is “excited about the smartphone business.”
“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,” the CEO said in an interview with the New York Times.
We’re excited to see what sort of devices Motorola Mobility will come up with now that it’s owned by Google. However, we’re also curious how this will affect Google’s relationship with Samsung, its biggest partner on Android.
What do you think? Tell us more in the comments.