Google cutting 4,000 jobs at Motorola unit

Google cutting 4,000 jobs at Motorola unit

Google Inc. is making its largest round of layoffsever as it announced plans to cut about 4,000 jobs at Motorola Mobility justthree months after buying the struggling cellphone pioneer.
The move isn't surprising given years of plummeting sales at Motorola, but itsignals that Google doesn't intend to drag Motorola along as a money-losingventure.
After the announcement, Google's stock rose $18.01, or 2.8 percent, to closeMonday at $660.01.
The reductions represent about 20 percent of Motorola Mobility's 20,000employees and 7 percent of Google's overall work force. Google says two-thirdof the job cuts will take place outside of the U.S.
Google, which has been growing for more than a decade, doesn't have a historyof mass layoffs. In previous rounds of layoffs, Google at most had cut a fewhundred workers.
Motorola, however, cut thousands of jobs in recent years as its cellphonedivision saw sales plummet. Although it pioneered the U.S. cellphone industryin the 1980s, it hasn't produced a mass-market hit since it introduced the Razrcellphone in 2004. Once the second-largest phone maker in the world, Motorolano longer ranks in the top 5.
Motorola now makes phones that run on Google's Android operating software, butrivals such as Samsung Electronics Co. have been more successful at it.
Motorola split into two in early 2011. Google snapped up Motorola Mobility, thehalf that makes cellphones and cable set-top boxes, for $12.4 billion. MotorolaSolutions, which makes police scanners and other professional products, remainsa separate company.
The Motorola deal is Google's largest acquisition ever and plunges it into thebusiness of consumer products. It puts Google in a position of competing withthe same companies it considers partners.
Google has pledged to keep the Motorola hardware business separate from itsAndroid software division and promised to treat Motorola like an outsidecompany. It turned to AsusTek Computer Inc. rather than its own division tomake a Google-branded tablet computer called Nexus 7.
Google's chief goal in buying Motorola was to use its large patent portfolio tobolster its legal defenses.
Apple has been suing Samsung, Motorola and other makers of Android smartphones,saying they copied the iPhone. By acquiring Motorola's patents and transferringthem to Android phone makers such as HTC Corp., Google can bolster their legaldefenses and set them up to counter-sue Apple.
Morgan Stanley analyst Scott Devitt wrote in a morning report, before Google'sannouncement, that he believes Google is limiting its ambitions for MotorolaMobility, a strategy he believes to be good for investors. Devitt expectsGoogle to curtail Motorola to producing just a few smartphone designs per yearand perhaps some tablets as well.
Before the acquisition, Motorola had been trying to turn itself around by focusingon smartphones, which have higher profit margins than regular cellphones. Inthe first quarter, Motorola sold 5.1 million smartphones and 3.7 million"dumb" phones. The cuts announced Monday will shift the companytoward smartphones even further.
The migration toward smartphones has slowed Motorola's decline, but it hasstill lost money in 14 out of the past 16 quarters.
Google said in a filing with the Securities and Exchange Commission that thelatest cuts are intended to make the business profitable. But the companywarned that investors should expect revenue to fluctuate over the next fewquarters, and sales will drop before the cost savings take effect.
Severance payments will cost Google about $275 million, which will largely becharged in the current quarter. The company also expects to book an unspecifiedamount in restructuring charges, mostly in the quarter.
Google also said it will close or consolidate about one-third of its 90locations.
Motorola announced in June that it would move its headquarters from the Chicagosuburb of Libertyville to downtown Chicago.

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