Google warns of more cuts at Motorola, third-quarter cuts to cost $340 million

Published October 04, 2012

| Reuters

Google Inc said planned job cuts at its Motorola Mobility mobile phone unit will cost about $340 million in severance and other costs in the third quarter and it warned of further restructuring that may result in "significant" charges.

"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.," the company said in a statement.

Google plans to shrink Motorola's operations in Asia by exiting unprofitable markets, abandoning low-end devices and focusing on a few models instead of dozens, the New York Times had reported earlier.

"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 company said.

The Internet search giant said in August that it would cut 20 percent of the workforce at Motorola Mobility, which it bought for $12.5 billion last year, as it moves to make more smartphones and fewer simple mobiles.

By pairing Motorola's smartphone business with its Android software, Google may have a better chance of mounting a direct challenge to Apple Inc's popular iPhone.

The acquisition raised concerns on Wall Street as investors fretted that Google was entering a business with much lower profit margins and in which it had little experience.

Analysts were expecting Google to wind down many of Motorola's legacy businesses to fit its strategy.

Google shares were up $1.60 at $764.10 in trading before the bell on the Nasdaq on Thursday.

(Reporting by Neha Alawadhi in Bangalore; Editing by Rodney Joyce and Sreejiraj Eluvangal)

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