After laying off 4,000 Motorola employees last year, representing around 20 percent of the total workforce, Google just announced that it would increase job cuts by a further 10 percent — now representing 1,200 people. The WSJ intercepted an internal email laying out the motivations behind this move.
“Our costs are too high, we’re operating in markets where we’re not competitive and we’re losing money,” said a Motorola spokesperson in the internal email. The business division is still losing a lot of money every quarter and it impacts Google’s bottom line.
Employees in the U.S., China and India will be affected. Since the acquisition, many Google executives have changed position to help run Motorola. But the turnaround hasn’t happened yet.
For Q4 2012, Motorola generated revenues of $1.51 billion, which represents a dip from previous quarters. And the company reported $353 million of GAAP operating loss.
Google acquired Motorola for $12.5 billion in mid-2011. At the time, it was widely speculated that the company was more interested in the patent portfolio than the phone designing capabilities of Motorola. It was a defensive move to protect Android against possible litigation.
Yet, over the past two years, Samsung has become the dominant Android phone manufacturer. Motorola could be useful in this situation as well. It allows Google to counter Samsung’s dominance if it needs to. Rumors mention a Google X phone that would be a flagship Android phone designed by Motorola and with Google’s marketing efforts behind it. Android suffers from fragmentation, and Motorola could be one of the only solution to fight it.
Around 10,000 employees will continue working for Motorola. While restructuring a company takes time and money, Motorola could greatly reduce its operating loss in the coming quarters. That will be the case if Motorola manages to maintain its sales numbers.