Motorola job cuts to cost Google more than expected, with a $300M bill for Q3 2012

Google executive chairman Eric Schmidt speaks during a press conference in this September 5, 2012 photo in New York, where Motorola introduced three new smartphones, the first since it became a a part of Google. (AP Photo/Bebeto Matthews)

As part of Google’s acquisition of Motorola Mobility, the company has announced plans to streamline operations by laying off about 20% of Motorola’s employees (two thirds of which outside of the U.S.). But while Google originally estimated the downsizing to cost $275 million in the 3rd quarter of 2012, the company is readjusting its estimates upward to $300 million.
In a statement, Google says the company is now broadening its generous severance packages to cover other regions. “Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,” said the company. Motorola is re-evaluating its operations, and is cutting back on its staff and facilities in order to focus on creating more smartphones and minimize its involvement in feature-phones.
The company wants to refocus its efforts by shifting “emphasis from feature phones to more innovative and profitable devices.” But $300 million may not be enough, as Google says it might face an additional $40 million in other costs related to quitting markets and closure of facilities.
Google announced the acquisition of Motorola Mobility in August of 2011, for $12.5 billion, in a deal mostly seen as a move to bolster the search company’s patent portfolio. Given the differences in the two companies’ core businesses, Google has been expected to wind down Motorola’s legacy businesses in order to fit the search giant’s strategy, including its Android smartphone and tablet platform.

Google executive chairman Eric Schmidt speaks during a press conference in this September 5, 2012 photo in New York, where Motorola introduced three new smartphones, the first since it became a a part of Google. (AP Photo/Bebeto Matthews)

As part of Google’s acquisition of Motorola Mobility, the company has announced plans to streamline operations by laying off about 20% of Motorola’s employees (two thirds of which outside of the U.S.). But while Google originally estimated the downsizing to cost $275 million in the 3rd quarter of 2012, the company is readjusting its estimates upward to $300 million.
In a statement, Google says the company is now broadening its generous severance packages to cover other regions. “Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,” said the company. Motorola is re-evaluating its operations, and is cutting back on its staff and facilities in order to focus on creating more smartphones and minimize its involvement in feature-phones.
The company wants to refocus its efforts by shifting “emphasis from feature phones to more innovative and profitable devices.” But $300 million may not be enough, as Google says it might face an additional $40 million in other costs related to quitting markets and closure of facilities.
Google announced the acquisition of Motorola Mobility in August of 2011, for $12.5 billion, in a deal mostly seen as a move to bolster the search company’s patent portfolio. Given the differences in the two companies’ core businesses, Google has been expected to wind down Motorola’s legacy businesses in order to fit the search giant’s strategy, including its Android smartphone and tablet platform.

SOURCES Reuters

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