Motorola to cut 4000 employees as it focuses on high-end devices
- 13 August, 2012 08:17
Motorola Mobility is cutting 4000 employees as the company shifts its emphasis from feature phones to focus on high-end devices.
About two-thirds of the staff reduction is set to occur outside the US, the company said in a statement.
Motorola, which was acquired by Google in May, plans to close or to consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio, making a shift from feature phones to more "innovative and profitable" devices, the company said.
Google had so far not discussed what it plans to do with Motorola, with some speculating that it bought the company primarily for its patents, and may not be interested in its mobile hardware business in a cut-throat market.
The Internet giant has however unveiled its own hardware products including the Nexus 7 tablet running the Android operating system at its recent I/O developers conference in San Francisco
While Motorola expects its new strategy to create new opportunities and help return its mobile devices unit to profitability, it understands how hard these changes will be for the employees concerned, Motorola said in its statement. The company is committed to helping the staff through the difficult transition and will be providing generous severance packages, as well as outplacement services to help them find new jobs, it added.
Motorola brought in US$1.25 billion in revenue in the quarter that ended June 30, about 10 percent of Google's total revenue. But Motorola also accounted for an operating loss of $233 million, which brought Google's total operating income down as a percent of its revenue by 6 percentage points.
Motorola plans to cut the number of devices the company makes from the 27 it introduced last year to just a few, Dennis Woodside, Motorola's new chief executive, told The New York Times. He plans to make products that are cool again, and include for example sensors that recognize who is in a room from their voices, cameras that take crisper photos, and batteries that last for days, according to the newspaper.
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