Google reported it would cut 4,000 workers, or 20% of the workforce of Motorola, the cellphone maker it bought for $12.5 billion last year, while shutting nearly a third of offices worldwide. Motorola has lost money in fourteen of the last sixteen quarters and in its latest quarter reported an operating loss of $233 million on revenue of $1.25 billion.
Google had evaded questions about its plans for Motorola when it reported quarterly results last month, saying it had yet to complete its homework on the various businesses, but has finally decided to downsize the loss-making unit.
“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 search giant said on Monday. Google, which expects to record the remaining severance related costs by the end of 2012, said it could also incur other related restructuring charges mainly in the third quarter. The Internet search company said it could not currently predict the amount of these other charges but added that they could be significant.
“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,” a Google spokeswoman said.
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