By Alexandra Burlacu | Aug 14, 2012 12:09 PM EDT
Google will cut 20 percent of the staff at its recently acquired Motorola Mobility unit, or roughly 4,000 jobs, the company announced on Sunday, Aug. 12. Two-thirds of the job cuts will be outside the United States, Google revealed in a regulatory filing on Monday.
"Motorola is committed to helping them [the employees] through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs," said Motorola.
In addition to the layoffs, Google will also shut down about a third of Motorola Mobility's 94 offices worldwide in an effort to streamline the company and simplify its wireless product portfolio. According to the search giant, the measure will cost no more than $275 million.
Google has also slashed Motorola's management team, eliminating 40 percent of its vice presidents, Bloomberg reported, citing "a person familiar with the matter." Motorola said this strategy should create new opportunities and help its mobile devices unit return to profitability.
Google plans to leave unprofitable markets, stop making low-end devices, and focus on a few quality phones rather than dozens, Dennis Woodside, Motorola's new CEO, told The New York Times in a rare interview.
"We're excited about the smartphone business," said Woodside, who previously led Google's sales and operations for the Americas. "The Google business is built on a wired model, and as the world moves to a pretty much wireless model over time, it's really going to be important for Google to understand everything about the mobile consumer."
According to Google's filing, the measures are designed to return Motorola's mobile devices unit to profitability. "Investors should expect to see significant revenue variability for Motorola for several quarters," said the company. "While lower expenses are likely to tag the immediate negative impact to revenue, Google sees these actions as a key step for Motorola to achieve sustainable profitability."
Google's first quarterly report with Motorola included in results showed Motorola Mobility contributed revenue of $1.25 billion for the second quarter. Google also noted that total sales were $12.2 billion, up from $9.03 billion a year earlier.
Google completed the $12.5 billion acquisition of Motorola Mobility in May, boosting its intellectual property with Motorola's impressive 17,000 patent portfolio. Moreover, the search giant plans to use the recently acquired company to strengthen its own Android-powered smartphones and tablets.
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