Google is seemingly trimming the Motorola Mobility fat so the company can finally generate some profit.
The Wall Street Journal reports that Google-owned Motorola Mobility is cutting even more jobs, laying off about 1,200 employees, or more than 10-percent of the overall headcount, from the hardware unit. The layoffs are seen as a move to return the smartphone maker to profitability as it struggles to regroup in a heated market dominated by Samsung and Apple.
According to the report, Motorola Mobility staff members were told via an internal email that the company still faces challenges even though new products are in the pipeline. "Our costs are too high, we're operating in markets where we're not competitive and we're losing money," the company email stated.
"These cuts are a continuation of the reductions we announced last summer," a Motorola representative told the paper. "It's obviously very hard for the employees concerned, and we are committed to helping them through this difficult transition."
Back in August 2012, Google confirmed that Motorola Mobility would cut 20-percent of its workforce, or about 4,000 jobs. Motorola Mobility posted an operating loss of more than $500 million USD in 3Q12, and then followed up with another $350 million+ loss in the fourth quarter. Job cuts were seemingly inevitable.
Then in December, Google sold the Motorola Home set-top business to Arris Group for $2.35 billion, and cut an additional 500 jobs. Google said at the time that Motorola Mobility still had 11,113 workers employed. There were also rumors that Motorola Mobility would begin focusing on high-end smartphones, one of which would be a Nexus-branded flagship device.
Patrick Pichette, Google's chief financial officer, followed up in January by stating during an earnings call that Motorola Mobility was still a work in progress. "I just want to remind everybody that we inherited 12-18 months of product pipeline that we have to work through," he said.
Google acquired Motorola Mobility in a $12.5 billion deal back in April 2012. Since then, many Android partners have feared that the new smartphone subsidiary would get special treatment despite the search giant stating otherwise. Google execs have actually called Motorola Mobility an "insurance policy" in case Google loses control of Android to Samsung.
One of the products supposedly in the pipeline is a Nexus-branded smartphone currently dubbed as the "X Phone." Google is looking to spark the same success Motorola experienced with the launch of the original DROID line, offering something new and exclusive to compete directly with Apple's iPhone and Samsung's line of high-end Android smartphones.