Late summer’s layoffs in the mobile sector are set to continue.
Google has announced that it intends to layoff 4,000 Motorola Mobility employees – about 20% of its entire workforce. According to a form 8-K filed earlier this month with the U.S. Securities and Exchange Commission (SEC), two-thirds of the layoffs will come from outside the U.S. There are also plans to consolidate the Motorola infrastructure by closing one-third of its facilities – about 30 locations. From the SEC filing:
These changes are designed to return Motorola’s mobile devices unit to profitability, after it lost money in fourteen of the last sixteen quarters. That said, investors should expect to see significant revenue variability for Motorola for several 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.
The $12.5 billion acquisition of Motorola Mobility, Motorola’s mobile hardware division, was finalized earlier this year after Chinese regulators approved the deal. Though the acquisition was in large part a purchase of Motorola’s expansive mobile patent portfolio, layoffs may signal that Google is looking to turn the company into a profitable competitor in the mobile hardware sector. Both companies have a long way to go, though. An NPD Group analysis revealed last week that Apple and Samsung are continuing to consolidate their power over the smartphone market at the expense of every other brand, including Motorola.
In an interview with the New York Times, Motorola Mobility CEO Dennis Woodside said his company will be leaving unprofitable markets. He also stated that it will no longer be making feature phones and other low-end devices, instead focusing on the smartphone market. According to Woodside, Motorola will drastically cut the number of phones it releases in an effort to make it’s products “cool again.”