Motorola is cutting 800 jobs in an effort to rein in expenses following third-quarter losses and prepare for its acquisition by Google.
Motorola expects to incur $31 million in costs related to severance packages and facility closings before the company sees any savings from planned workforce cuts. The Libertyville, Ill.-based mobile-phone maker last week revealed its layoff plans in a regulatory filing with the U.S. Securities and Exchange Commission.
Motorola’s budget dictates it cut costs despite a nine percent increase in smartphone sales. The company posted a $32 million loss in the third quarter, including $18 million in expenses related to its planned acquisition by Google.
That deal is subject to regulatory approval by the U.S. Justice Department and slated for a shareholder vote next month. The $12.5 billion sale is expected to close by early 2012.
The search giant is buying Motorola Mobility to beef up its mobile patent library and move into the hardware business, a plan expected to provide an even more competitive edge for its Android OS, which powers the mobile market’s most popular smartphones.
Motorola reinvented itself in the mobile market by focusing solely on Android models and early dominated that niche. But Motorola has struggled against mounting competition as other phone makers like HTC and Samsung dedicated efforts to their own Android handsets.
Motorola’s steps to slash expenses and trim operations mirrors other mobile device companies’ efforts to lower costs with layoffs this year. BlackBerry maker Research in Motion cut 2,000 workers this summer to recoup losses, and LG Electronics laid off nearly 30 percent of its overseas staff in another cost-cutting attempt last month.
“Motorola Mobility continues to focus on improving its financial performance by taking actions to manage the company’s costs,” said Jennifer Weyrauch-Erickson, spokeswoman for Motorola Mobility. She added the efforts are not related to the proposed Google acquisition.
As Motorola turns out employees in an effort to trim expenses, the coming weeks will likely reveal whether its deal with Google will be enough to turn the company’s fortunes around.
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