Motorola Mobility cuts 800 jobs prior to Google acquisition

By Gadjo Cardenas Sevilla

Motorola Mobility will let go of 800 people in preparation to the acquisition by Google. The job cuts will cost around $27 million in severance as well as $4 million for factory closures according to a report form Bloomberg Businessweek.  Google is purchasing Motorola Mobility for $12 billion, the acquisition was announced on August 15th.

“Motorola Mobility continues to focus on improving its financial performance by taking actions to manage the company’s costs,” Jennifer Weyrauch-Erickson, a spokeswoman for Motorola Mobility, said in a statement. She said the efforts are unrelated to the proposed acquisition.

On Oct. 27, Motorola Mobility announced financial results that beat analyst estimates as sales climbed 11 percent to $3.26 billion. The company is still losing money, though its loss narrowed to $32 million, or 11¢ a share, from a loss of $34 million a year earlier, the report said.

The Motorola Mobility purchase by Google, which came after the search giant was derailed from winning patents from Nortel Networks, is seen by many in the industry as a way to secure Motorola's ample mobile and telecom patents. Google, whose Android mobile operating system is being used by Motorola, Smasung, HTC, LG, Dell and other manufacturers, has been caught in a storm of litigation from rivals like Apple and Microsoft.

In its filing, Motorola Mobility said that it generated a $215 million operating loss through the first nine months of 2011. Through the first three quarters of 2010, the company had an operating loss of $148 million.

"Handset unit shipments in the first nine months of 2011 were 31.2 million units, a 20% increase compared to shipments of 26.0 million units in the first nine months of 2010," Motorola said in its filing. "Smartphone shipments in the first nine months of 2011 were 13.3 million, a 52% increase compared to shipments of 8.8 million smartphones in the first nine months of 2010. In addition to handsets, we also shipped nearly 800 thousand media tablet units in the first nine months of 2011."

Google CEO Larry Page posted the following statement on his personal Google Plus pages following news of the Motorola Mobility acquisition.

"We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to 'protect competition and innovation in the open source software community' and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."

Source: Bloomberg Businessweek