Google is closing most of Motorola Mobility’s operations in South Korea as part of a drive to cut the unit’s losses
Google’s Motorola Mobility unit, which was acquired in May for $12.5 billion (£7.8bn), is closing its South Korean operations as Google continues to shrink the division to stave off its financial losses.
The move was announced by Google and Motorola Mobility on 10 December in a statement issued by the company.
“On 10 December, we began communicating to staff in Korea our plans to close most of our operations in Korea, including our research and development and consumer mobile device marketing organisation,” the statement said. “The changes in Korea reflect our plans to consolidate our global R&D efforts to foster collaboration, and to focus more attention on markets where we are best positioned to compete effectively.”
Motorola Mobility won’t completely disappear from the Korean market, the companies said. “Our Home business and iDEN [wireless networks] go-to-market operations will continue operating in Korea,” according to the statement. “We will also continue to provide customer service and warranty support for mobile devices that have been sold in Korea.”
About 10 percent of the R&D staff working at the facility that’s being closed will be offered the chance to relocate for new jobs, according to the companies. No figures for the overall number of jobs being cut have been announced.
“This was a difficult but necessary decision,” the statement said. “We are very proud of the work done by our talented teams in Korea, and the many contributions they have made to our business over the years.”
The closing of the South Korea operation is not a surprise. In August, Google officials announced some 4,000 layoffs inside Motorola Mobility, then in October the company filed papers with the US Securities and Exchange Commission (SEC) detailing further plans to “broaden those actions to include additional geographic regions outside of the US”.
Google has not said whether those broadened actions will add to the 4,000 previously announced job cuts.
The cost-cutting steps announced in August also included about 30 Motorola facility closings. Two-thirds of the facility closings were slated at that time to occur outside the United States. The company also stated at that time that it planned to close or consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio – shifting the emphasis from feature phones to more innovative and profitable devices.
The cuts are being made to try to reverse financial losses in the Motorola unit, which has lost money in 14 of the last 16 quarters, according to Google.
In July, Google gave its first revenue report since officially acquiring Motorola Mobility, posting second-quarter revenue of $12.21 billion, which was a 35 percent increase from $9.03 billion in the second quarter of 2011. The $12.21 billion second-quarter revenue was up 15 percent from the first quarter of the year, when Google reported $10.65 billion in revenue, according to the company. GAAP (generally accepted accounting principles) net income reported in the second quarter of 2012 was $2.79 billion, compared with $2.51 billion in the second quarter of 2011.
Much of the value in the purchase of Motorola was fueled by Google’s desire to bolster its own patent portfolio by bringing in Motorola’s estimated $5.5 billion worth of patent holdings.
Those patents are seen by Google as assisting the company as it expands its reach into mobile hardware and services around the world, according to a recent SEC filing.
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