Motorola Mobility has lost money in 14 of the past 16 quarters, Google says
MOUNTAIN VIEW, Calif.—Google Inc. plans to cut about 4,000 positions at its Motorola Mobility subsidiary, about one-fifth of the cellphone maker’s total workforce.
The leading search engine company says two-thirds of the reductions at Motorola Mobility will be outside of the United States but Google didn’t disclose details.
Motorola Mobility has lost money in 14 of the past 16 quarters, Google said.
Google said the changes are intended to make the Motorola unit profitable, but warned that investors should expect the business’ revenue to fluctuate over the next few quarters.
“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 said in a filing with the Securities and Exchange Commission.
Google said it also will shift Motorola Mobility’s focus from simple wireless phones to more profitable devices.
The restructuring will cost Google about $275-million in severance costs, which will largely be recognized during the third quarter.
The company also expects to book an unspecified amount in restructuring charges, mostly in the third quarter.
Mountain View, Calif.-based Google Inc. completed its $12.5-billion purchase of Motorola Mobility in May.
The deal, the most expensive in Google’s history, expanded it into the hardware business and pushed it deeper into the cellphone business, a market it entered four years before with the debut of its Android software.
The cellphone pioneer had struggled in the years leading up to the deal.
It hadn’t produced a mass-market hit since it introduced the Razr cellphone in 2005 and its market share has fallen.
Google shares rose $9 to $651 in pre-market trading.