Search engine giant Google Inc (NASDAQ:GOOG) plans to spend $340 million in FQ3, as it continues its restructuring process in Motorola Mobility. The statement, as filed under FORM 8-K/A, to the Securities Exchange Commission (SEC) reads, “Google’s wholly owned subsidiary, 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.”
The company said that out of the $340 million worth of payouts, $300 million will be attributed to parting company with employees, while the $40 million in remaining funds will be charges related to the facility and market exits. The latter is estimated to cost the company, $90 million, although Google revealed that, it will only pay $40 million in the current quarter.
Google Inc (NASDAQ:GOOG), acquired Motorola Mobility Holdings Inc (NYSE:MMI) earlier this year for $12.5 billion, in an attempt to venture into the smartphone and tablet business, which is currently dominated by Korea’s Samsung Electronics Co. Ltd and Apple Inc. (NASDAQ:AAPL).
In addition to that, Google Inc (NASDAQ:GOOG) also partnered with Asustek (ASUS), to produce its first ever tablet, the Nexus 7. The company’s initial contribution to the smartphone industry came in the form of its Android Operating System, now posing a challenge to Apple’s iOS and Microsoft Windows, among others.
Nonetheless, the latest steps to venture, in full capacity, into the smartphone industry has not come without drawbacks. The company has been in the process of restructuring its fully owned subsidiary, Motorola Mobility, since acquiring it, as it intends to only keep units that are profitable to its business.
The company has been slowly changing Motorola Mobility Holdings Inc (NYSE:MMI)’s strategy from over reliance on mobile phones, to focusing on the production of smartphones. Furthermore, the company has replaced Motorola Mobility’s CEO, Sanjay Jha, with one of its former employees, Dennis Woodside, in an attempt to steer the process.
In August, the company indicated that it was planning to cut down 20%, or 4,000, of its manpower from its new division, equivalent to $275 million worth of severance charges. According to the company, this was to be done to help Motorola Mobility return to profitability.
Google’s senior vice president and CFO, Patrick Pichette, wrote in the filing, saying, “Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant”. This is a clear indication that, the process of restructuring its new acquisition is continuous, and should not be expected to end anytime soon.
At the time of this writing, Google Inc (NASDAQ:GOOG) stock was trading at $766.67 per share, up $4.17, or 0.55% from yesterday’s close.