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?
With Googles 80 bajillion dollars*, I’m pretty sure they could fuel some serious funds into Motorola if they were interested in making them a serious contender again in the smartphone realm. But with these kinds of drastic cuts, can’t help but think Google just wants to make their money back and little else.
*actual net worth figure may be exaggerated
Motorola hasnt been entirely left in the dust. They did make the original Droid which put Android on the map for thousands of people. However, their screen technology has been lagging, and their cameras are some of the worst. On Verizon, they still dont have a 720 screen and the razrs cameras fail compared to HTC and the GSIII. Still, they are the first company to truly offer a battery that will last 1 if not 2 days. If they can just polish the experience, imho, their UI is the ugliest.
Agreed, Motorola really isn’t too far behind. They just have to catch up in a few key categories and they will have a product that competes with the best of the best in the Android world.