It will also close about a third of Motorola’s 90 worldwide facilities. According to the SEC filing where the downsizing was disclosed, the changes are aimed at returning Motorola’s mobile devices unit to profitability after it lost money in 14 of the last 16 quarters.
The New York Times reported today that Motorola will be letting go of 40 percent of its vice presidents and shrink operations in Asia and India in order to centralize operations around Beijing, Chicago and Sunnyvale, Calif.
Google warned that "investors should expect to see significant revenue variability for Motorola for several quarters," noting that 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 profitability going forward. Motorola said it will provide employees with "generous severance packages, as well as outplacement services to help the employees find new jobs."
Google expects to incur a severance-related charge of no greater than $275 million, which it believes will be largely recognized in the third quarter, with the remaining severance-related costs written down by the end of 2012. Google also added that it expects to incur "other restructuring charges" related to the cuts but said it could not predict the amount of those charges, only saying that they "could be significant."
Google in May received final approval from China of its $12.5 billion acquisition of Motorola Mobility. Google has admitted to an eye for Motorola’s extensive patent portfolio, which includes more than 17,000 patents. After losing out on an auction of Nortel's patents, Google had been searching for ways to protect Android from litigation. In its regulatory filing today, Google said it will "simplify Motorola's mobile product portfolio—shifting the emphasis from feature phones to more innovative and profitable devices."
Implementing the proposed changes to Motorola's business will fall to newly-minted CEO Dennis Woodside, who was appointed to replace Sanjay Jha. Motorola's share of the smartphone market has been slipping lately, as Samsung and Apple continue to lead the pack. In July, Nielsen released numbers showing that Motorola had controlled just 11 percent of the Android market, falling behind HTC’s (14 percent) and Samsung (17 percent).
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