Google Inc (NASDAQ:GOOG), which acquired Motorola Mobility Holdings Inc (NYSE:MMI) for $12.5 billion last year in May, plans to eliminate 4,000 employees in the Motorola division. The lay off is 20 percent of Motorola Mobility’s 20,000 strong team. The Mountain View, California-based company said Monday, in an SEC filing, that two-third of all the job cuts will be outside the US, especially in Asia. Google also announced plans to close one-third of Motorola’s 90 facilities worldwide.
Google Inc (NASDAQ:GOOG) is planning to restructure Motorola Mobility Holdings Inc (NYSE:MMI), which has incurred heavy losses in 14 of the past 16 quarters, and bring it back into profit zone. The company said it expects to incur $275 million in severance-related costs. “Investors should expect to see significant revenue variability for Motorola for several 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 in SEC filing.
The CEO of Google, Larry Page, acquired Motorola in a bid to compete with Apple Inc. (NASDAQ:AAPL). Google will simplify the wireless portfolio of Motorola, and use it to manufacture tablets and smartphones. The acquisition also gave Google Inc (NASDAQ:GOOG) the ownership of over 17,000 patents. The world’s largest search engine company already has the Android platform that rules the smartphone market, with 68 percent of the market share. However, most of the Android devices are facing legal battles with Apple Inc. (NASDAQ:AAPL), which has accused them of infringing its patents.
Before Google’s SEC filing, Motorola Mobility Holdings Inc (NYSE:MMI) said in an e-mail, they are committed to helping the outgoing employees find new jobs and will also provide generous severance packages. Additionally, The New York Times reported that Google Inc (NASDAQ:GOOG) has fired 40 percent of Motorola’s vice presidents.
Motorola had launched about 20 smartphones last year, but none of them was a hit. Dennis Woodside, the head of Motorola unit, says that the company released too many smartphones last year, and now it will focus on making a few great devices and marketing them effectively.
Google stock prices were up $7.20 to $649.20 in premarket trading.