Google to cut 1,200 Motorola jobs

Google has announced a further 1,200 job cuts at its Motorola division as it tries to restore its 2012 acquisition to profitability.

This comes on top of the internet company’s already announced plans to cut 4,000 jobs, or 20 per cent of the workforce, last August, with two-thirds coming from outside the US, although it later increased the overseas figure.

“Our costs are too high, we’re operating in markets where we’re not competitive and we’re losing money,” said an internal Motorola email about the job cuts, the Wall Street Journal reported.

In an apparent reference to new smartphones on the way, the email said the company was very optimistic about new products in the pipeline.

Google paid $12.5 billion for Motorola last May in its biggest ever acquisition. Although the deal seemed motivated by a desire to strengthen its patent portfolio with Motorola’s intellectual property, analysts fretted that the loss-making hardware company would be a drag on Google’s earnings.

But the Silicon Valley company’s aggressive attempts to return Motorola to profitability have encouraged Wall Street and contributed to its shares reaching a record high of $844 this week.

Google agreed a $2.35 billion cash-and-stock deal in December to sell Motorola’s TV set-top business to the network equipment make Arris.

Motorola Mobility, minus the Home division, recorded $1.5 billion in revenues in the fourth quarter, but an operating loss of $152 million. Google said on its earnings call in January it was “not in the business of losing money with Motorola or even cross-subsidising it”.

The latest job cuts are understood to affect employees in China, India and the US. “These cuts are a continuation of the reductions we announced last summer,” the company said.

“It’s obviously very hard for the employees concerned.” – Copyright The Financial Times Limited 2013