By Alexei Oreskovic
Oct 4 Google Inc raised its estimate of
the cost of job cuts at its money-losing Motorola Mobility unit
in the third quarter and warned of "significant" additional
charges from further restructuring.
Severance-related charges at its mobile phone unit will be 9
percent higher at $300 million, Google said, adding the bill may
rise another $40 million in the quarter after the exit of
facilities and markets.
"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's broader plan for the money-losing cellphone maker
A spokeswoman said the company was not announcing additional
Shares of Google were up 0.7 percent at $767.65 in midday
trading Thursday, at a record high.
Google acquired Motorola in May for $12.5 billion to bolster
its patent portfolio as its Android mobile operating system
competes with rivals such as Apple Inc and Samsung
Electronics Co Ltd.
But many investors and analysts have questioned Google's
need to be in the hardware business, where profit margins are
lower and Google has little experience.
"There's some lack of fully understanding beyond those
patents what there is for Google to do with Motorola," said
Needham & Company analyst Kerry Rice.
"Investors have been waiting to see if Google keeps it as
is, or makes any drastic changes by selling off certain
divisions or manufacturing operations," Rice said.
So far, Rice said Google has kept mum on its long-term plans
for Motorola and has kept its focus on making the business less
of a drag on profitability.
Motorola's mobile devices unit has lost money in 14 of the
last 16 quarters. In the second quarter, Motorola reported an
operating loss of $233 million on revenue of $1.25 billion.
Recent media reports have suggested that Google may sell the
Motorola Mobility's television set-top box business.
The world's No.1 Internet search company, which is due to
report its third-quarter results later this month, has found
favor on Wall Street despite the questions about Motorola.
Google's lucrative search advertising business looks
increasingly attractive to investors, compared with social Web
companies such as Groupon Inc and Facebook Inc,
whose long-term money-making capabilities are less clear, say
Google said in August it would cut 20 percent of the
Motorola Mobility workforce as it moves to make more smartphones
and fewer simple mobiles.
The New York Times has reported that Google planned to
shrink Motorola's operations in Asia by exiting unprofitable
markets and abandoning low-end devices to focus on a few models
Motorola Mobility, which has 94 offices around the world,
has centralized its research and development in Chicago,
Sunnyvale, California and Beijing.
"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," Google said in Thursday's statement.