Google to cut Motorola Mobility workforce by 20%

Tue, Aug 14, 2012, 01:00

GOOGLE WILL slash 20 per cent of the workforce of Motorola Mobility in the internet search giant’s largest job cuts yet as it moves to make more smartphones and fewer simple mobiles.

The news sent Google’s shares up as much as 2 per cent but analysts said it was unclear if the cuts were enough to restore the fortunes of Motorola, whose last hit was the Razr flip-phone launched eight years ago.

Google bought the loss-making mobile-phone maker for $12.5 billion (€10 billion) last year, aiming to use Motorola Mobility’s patents to fend off legal attacks on its Android mobile platform and expand beyond its software business.

The phone maker has lost money in 14 of the last 16 quarters and in its latest quarter reported an operating loss of $233 million on revenue of $1.25 billion.

While many questions remained over Motorola’s strategy, Morgan Stanley upgraded Google to “overweight” after the cuts.

“We believe that Google is planning to reduce Motorola Mobility’s smartphone portfolio to a few reference Android devices, and perhaps a couple of tablet devices,” analysts at the brokerage said.

Google had evaded questions about its plans for Motorola Mobility when it reported quarterly results last month, saying it had yet to complete its homework on the various businesses.

It said in a regulatory filing it expected to take a severance-related charge of up to $275 million mostly in the third quarter, but with some possibly trailing through to the end of the year. It warned there could be other significant charges yet to be calculated.

Yesterday Google also agreed to acquire all of John Wiley and Sons’ travel assets, including the Frommer’s brand, as it expands its local services. Terms were not disclosed. The deal would give Google about 350 travel guides and the Frommers.comtravel-planning website.

Google is providing more of its own content to web surfers by adding information on hotels and restaurants in a bid to attract users and advertisers from sites such as Yelp and TripAdvisor. – (Reuters)