Beginning today, Google will begin laying off 4000 employees or about 20% of Motorola Mobility’s work force. The big G has also decided to close over 30 offices of Motorola Mobility around the world. Google has filled in the 8-K form as part of the SEC filing to show the cost incurred due to the layoffs as well as the severance pay that has to be given to the employees. Some number crunching after the break.
This is an excerpt from the 8-K filing:
Google expects to incur a severance-related charge of no greater than $275 million, which it believes will be largely recognized in the third quarter, with the remaining severance-related costs recognized by the end of 2012. Google also expects to incur other restructuring charges related to the actions described above, the majority of which will be recognized in the third quarter. Although Google cannot currently predict the amount of these other charges at this time, these additional charges could be significant.
If you talk on a global level, the job cuts are going to be pretty severe for the rest of the world rather than the US. About two thirds of the job cuts are going to happen outside the US, which Google sees as the reason for Motorola Mobility’s recent decline. Overall usage of Motorola smartphones is also on an all time low considering just last year it was one of the most used smartphone brands in the US. Therefore consolidating its efforts in the US can bring the cell phone pioneer back to profitability.
It should also be noted that Motorola Mobility has been on a steady decline since its Google acquisition dues to uncertainty in the market regarding the future of the company. This can be seen as a focused approach towards streamlining Moto into an android smartphone manufacturer, which has a definite upside for the consumer.