Monday morning did not arrive with pleasant news for the Motorola Mobility work force. Google, which bought Motorola in May, told staff Sunday that it will begin cutting 20 percent of its employees and closing 33 percent of its offices worldwide.
The move is inevitable seeing as how Motorola has been struggling to be profitable, losing money in 14 of the last 16 quarters, reports The Wall Street Journal. This 20 percent cut will account for approximately 4,000 jobs from its 20,000 employees along with 30 out of its 90 offices slated for closure. A third of the layoffs will come after United States-based employees though it has not been specified which facilities will be affected.
In reducing its work force, Google said in its filing with the Securities and Exchange Commission that this change will “shift its emphasis from feature phones to more innovative and profitable devices.” Which makes sense, since Motorola will have a long way to catch up with Android giants Samsung and HTC.
According to The New York Times, Motorola aims to “stop making low-end devices and focus on a few cellphones instead of dozens.” This means a cut from its current 27 phone models to select, higher end editions — ones that are packed with unique features no other phones have such as the ability to recognize who is in the room based on voice or batteries that can last for days. Still, an analyst even described Motorola as being “left in the dust by the competition and kind of missed the smartphone transition,” so these ambitions are purely hopeful, to say the least.
The cuts are slated to cost Google no more than $275 million which will be recognized in the third quarter, with continuing charges to incur within the next few quarters. Google told investors that they should anticipate “significant revenue variability” as part of an overall restructuring to make Motorola a viable company again.
“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 stated in the SEC filing.
With Motorola in the hands of the search engine giant, do you think it has a chance of coming back with innovative mobile devices? Or is it true that it has truly been left behind by the likes of Samsung and Apple?