Google announced that Motorola Mobility, which it acquired in May, will be laying off 20 percent of its global workforce, affecting 4,000 employees.
The Chicago Tribune is reporting that Google has new plans for Motorola Mobility, including closing about one-third of its 90 facilities. Google wants Motorola to focus more on creating more innovative and cutting-edge phones, instead of the lower-end phones it has been making. By reducing headcount and closing facilities, Google hopes to improve Motorola Mobility’s finances; the company has lost money in 14 of the last 16 quarters, most recently losing U.S.$233 million in Q2 2012.
Yankee Group Research VP Carl Howe comments
“Google promised when it acquired Motorola Mobility that it would run it as a separate business, and this move shows that hard line profit-and-loss thinking. Motorola is refocusing both staff and facilities on high-profit smartphones and away from lower-margin markets. It’s just good business practice; Motorola isn’t relying on Google to subsidize money-losing product lines.
This does leave open the question of what Motorola will do with its facilities that make cable set top boxes. To my mind, Google is more likely to sell that division rather than shut it down; the set top box market has only a few major suppliers in the U.S., and Motorola is one of them. Selling the division will provide some return on Google’s U.S.$12.5 billion acquisition while focusing Motorola Mobility on its namesake: mobility.”
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