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Google to Cut 4,000 Motorola Jobs

Google (Nasdaq: GOOG) plans to slash 20 percent of Motorola Mobility LLC 's workforce -- about 4,000 jobs -- as it attempts to return the phone maker to profitability.

Google outlined part of the plan in this 8-K filing, noting that two-thirds of the job cuts would occur outside the U.S. Google is closing about a third of 90 facilities worldwide as it shifts its emphasis away from cheaper feature phones to the more profitable smartphone market.

"These changes are designed to return Motorola's mobile devices unit to profitability after it lost money in fourteen of the last sixteen quarters," the filing noted, adding that the decision will result in a severance-related charge of "no greater than $275 million." Most of that will be recognized in the third quarter.

Dennis Woodside, the new head of the Motorola unit, told The New York Times that the company will stop making lower-end phones as part of its plan to exit unprofitable markets, adding that Motorola will chop down the number of devices it makes from the 27 it launched in the last year to just a few. "We're excited about the smartphone business," Woodside told the paper.

The Times also reported that Google has "gutted Motorola management," letting go 40 percent of its vice presidents."

Why this matters
Word of the job cuts come almost three months after Google closed its $12.5 billion acquisition of the maker of smartphones, set-tops, cable modems and broadband access gear. Google bought Motorola Mobility and its raft of patents primarily to defend Android, but these major operational moves suggest that Google still wants the newly acquired division to continue making smartphones and tablets, but will have to cut deeply if it's to have a shot at catching up with the likes of Samsung Corp. and Apple Inc. (Nasdaq: AAPL). (See Samsung Leads Smartphone Sector.)

The 8-K made no mention of cuts involving Motorola's Home division, which makes set-tops and broadband modems and access equipment. Google is making plans to put the Home division on the block as soon as this fall, according to industry sources and people familiar with the plan. Motorola's Home division recently reassigned a "small portion" of its field engineering team to an outsourcing firm, but said the process was well underway before Google acquired the company.

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— Jeff Baumgartner, Site Editor, Light Reading Cable



Jeff Baumgartner 12/5/2012 | 5:24:01 PM
re: Google to Cut 4,000 Motorola Jobs

Part of this is covered in the 8-K, but here's the statement from a Motorola spokesperson:

"While we expect this strategy to create new opportunities and help return Motorola's mobile devices unit to profitability, we understand how hard these changes will be for the employees concerned.  Motorola is committed to helping them through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs." ###

sarahthomas1011 12/5/2012 | 5:24:00 PM
re: Google to Cut 4,000 Motorola Jobs

Moto's plan to focus on fewer, high-end smartphones sounds familar...HTC and others are working on that same strategy. Even with fewer models though, differentiation will still be the main challenge. They'll have to do something better than the rest. Google should help Moto out there.

joset01 12/5/2012 | 5:24:00 PM
re: Google to Cut 4,000 Motorola Jobs

Man, Nokia, RIM and Motorola all appear to be flaming out right now. Maybe they should all just merge to have a chance against the Apple-Samsung Juggernaut. :-)

krishanguru143 12/5/2012 | 5:23:58 PM
re: Google to Cut 4,000 Motorola Jobs



You have to have competent management though, something that all three has not nor do they currently have.

 

Nokia, they bet the farm on Symbian^3, MeeGo and using Qt to bring it all together.  Right before they achieved it, Elop killed it all.  They were still seeing double digit growth in the smartphone side at that time as well.  All they needed was another couple of quarters, but Elop would have none of it.  Now look at where they are.  Pre Elop they sold 134 million smartphones per year, now with WP, they are under 10 million.  Even Series 40 was to get Qt.  So you had hundreds of millions of handsets being sold that common apps (with slightly different packaging) could be run across all three lines.  That would have been a huge ecosystem that not even Android could compete against.

 

RIM needed to get to evaluate their business years ago.  They should have dropped the BB line of handsets and just worked on the BB Connect software as well as the backend software to support it.  This is really where the money is and many companies didn’t have a problem paying for it.  As users didn’t want a BB phone, companies were forced to look elsewhere because RIM didn’t really want to support BYOD.  RIM would still be thriving if the just focused on their real core business.  They didn’t wand wanted to stay in the hardware game and now look at where they are.  Customers have looked for alternatives.

Motorola was a giant in the analog days.  The switch to digital saw their and they have never recovered.  They tried to produce their own CDMA chips and ultimately they were very late and they were of a poor design.  Their first CDMA phone was such a failure as only one provider picked it up and quickly dropped it as it didn’t work; mainly because Motorola thought they could get their phones to work better by allowing high transmit power than what the spec called for.  It didn’t work.  The RAZR saw Motorola get a customer base again but they just sat there rehashing the same design over and over again.  Soon the phone was the free phone you got with a new contract.  Eventually Motorola faded back into being forgotten about.  They have tried to make a name for themselves with Android but the constant “Motorola” spin has not worked out well for them.  How many users actually liked Motorola Blur compared to those that hated it?  They wanted to show they could be different, but being different can also cause you to be odd man out.

In the end, Nokia could have been holding their own against Apple, RIM would be device agnostic and just provide the BB connect for all major platforms if both of them had real management.  Motorola, too many users have sworn them off from past experience and ultimately they were always doomed.




opticalwatcher 12/5/2012 | 5:23:53 PM
re: Google to Cut 4,000 Motorola Jobs

Nokia was seeing double digit growth because the whole phone market was taking off. But if you looked at market share, it was dropping, and the rate at which it was dropping was accelerating, something Nokia had never experienced before (and this was when the iPhone and Android were just starting to take off).

They tried desperate moves like open sourcing Symbian and partnering with Intel, none of which went anywhere (Intel was plodding along and would eventually have come out with something, but by then Apple and Android would have already moved the target).

It was becoming clear, though, that the marketplace wanted a different kind of phone--one that needed a large infrastructure behind it, with cloud based services, a large, active app store. There was no way Nokia had the resources to build this up, especially when they were losing market share at a precipitate rate.

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