October 05, 2012

Motorola Mobility Could See 'Significant' Restructuring Charges as Layoffs Loom


Google has warned that its Motorola Mobility unit could see “significant” restructuring charges. But it appears the company is not increasing the number of previously announced layoffs.

Google is planning to let go of workers at Motorola – and announced this week it will make some of the layoffs at Motorola Mobility locations outside of the United States.


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The company also will take $390 million in costs connected to the layoffs, company filings said.

“Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.,” according to a recent SEC filing by Google – Motorola Mobility’s parent company.

 “Based on current information, Google expects to incur severance-related charges of approximately $300 million, which will be recognized in the third quarter of 2012 and of which approximately $250 million is expected to be paid in cash, and other charges related to facility and market exits, primarily in cash, of approximately $90 million in 2012 and 2013, of which approximately $40 million is expected to be recognized in the third quarter of 2012.”

“Motorola continues to evaluate its plans and further restructuring actions may occur, which may cause Google to incur additional restructuring charges, some of which may be significant,” the filing added.

Google released a statement this week that said, "This filing was made to provide updated information around Motorola Mobility's cost reductions that were announced earlier this summer." 

The Associated Press reported that Google is not adding to the 4,000 layoffs it announced for Motorola in late August. Google plans to close or consolidate about one-third of Motorola's 90 locations.

In August, Google said Motorola Mobility would cut 20 percent of its workforce.

In May, Google acquired Motorola Mobility, which manufactures cell phones and cable set-top boxes, for $12.4 billion. The company has a rich patent portfolio.

In its report on the recent SEC filing, Reuters News Service said that “Google's broader plan for the money-losing cell phone maker remained unclear.”

"There's some lack of fully understanding beyond those patents what there is for Google to do with Motorola," Needham & Company analyst Kerry Rice said.




Edited by Brooke Neuman



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