August 13, 2012, 4:17 AM —
Motorola Mobility is cutting 4,000 employees as the company shifts its emphasis from feature phones to focus on high-end devices, the company said late Sunday.
About two-thirds of the staff reduction is set to occur outside the U.S., the company said in a statement.
Motorola, which was acquired by Google in May, plans to close or to consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio, making a shift from feature phones to more "innovative and profitable" devices, the company said.
Google had so far not discussed what it plans to do with Motorola, with some speculating that it bought the company primarily for its patents, and may not be interested in its mobile hardware business in a cut-throat market.
The Internet giant has however unveiled its own hardware products including the Nexus 7 tablet running the Android operating system at its recent I/O developers conference in San Francisco
While Motorola expects its new strategy to create new opportunities and help return its mobile devices unit to profitability, it understands how hard these changes will be for the employees concerned, Motorola said in its statement. The company is committed to helping the staff through the difficult transition and will be providing generous severance packages, as well as outplacement services to help them find new jobs, it added.
Motorola brought in $1.25 billion in revenue in the quarter that ended June 30, about 10% of Google's total revenue. But Motorola also accounted for an operating loss of $233 million, which brought Google's total operating income down as a percent of its revenue by 6 percentage points.
The move by Google is designed to return Motorola's mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters, Google said in a regulatory filing on Monday. Investors should however expect to see significant revenue variability for Motorola for several quarters, it added.