Motorola Mobility to Cut 4,000 Jobs, Restructure as Part of Financial Strategy

— August 13, 2012

Google recently announced that it would be cutting approximately 4,000 of Motorola Mobility's (Motorola) 20,000 jobs worldwide as part of a restructuring initiative. According to a filing with the Securities and Exchange Commission (SEC) on August 3, the restructuring is meant to make Motorola Mobility sustainably profitable.

The filing also indicatea that Motorola intends to reduce two-thirds of its staff  outside of the United States. Due to layoffs, Motorola will be offering affected employees severance packages and outplacement services. Google expects to pay out a severance amount no greater than $275 million, most of which will be incurred in the third quarter of 2012 with all being paid out by the end of the year.

Perhaps Dennis Woodside, chief executive officer of Motorola Mobility, was foreshadowing in May when he said, "Our aim is simple: to focus Motorola Mobility's remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world."

It would appear that the changes Woodside was alluding to are beginning to take place. In addition to the reduction in staff, the SEC filing also indicated that Motorola is planning to close or consolidate roughly one-third of its 90 worldwide facilities and changes its product focus.

The company expects to shift away from production of feature phones to the development of "more innovative and profitable devices" - presumably, smart devices - in order to keep pace with its competitors.

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