Those who questioned why Google (Nasdaq: GOOG) wanted to get into the hardware business when it acquired Motorola Mobility for $12.5 billion in May are getting their answer in a roundabout way. Google doesn't really want to be in the hardware business.
The search engine-that-wants-to-be-more has already sliced and diced the Moto Mobility workforce. Now comes word that it's raised its estimate of the cost of job cuts in the third quarter and warned there will be "'significant' additional charges from further restructuring," according to a Reuters story.
In dollars, this means that Google is facing $300 million in severance-related charges at its Motorola unit, 9 percent higher than anticipated. That bill might spike another $40 million in the quarter.
"Motorola has continued to refine its planned restricting actions and now expects to broaden those actions to include additional geographic regions outside of the U.S.," a Google statement said.
A spokeswoman told Reuters that the company was not announcing additional job cuts, but the plan for the unit is unclear. Word on the street has been that Google is looking to sell off the Motorola Home unit that builds MVPD network and residential equipment like set-top boxes, modems and gateways. Many observers believed from the beginning that Google was only after Motorola's mobile patents and was not interested in the rest of the business and would eventually sell or close it.
"There's some lack of fully understanding beyond those patents what there is for Google to do with Motorola," Needham & Company analyst Kerry Rice told Reuters.
Since Google has jumped into the service provider space itself with its Google Fiber service in Kansas City, there was some speculation that it might keep the MVPD equipment business and use it as a launch pad for Android-based IPTV equipment. That hasn't happened--at least for now--which further confuses analysts.
"Investors have been waiting to see if Google keeps it [Motorola] as it is or makes any drastic changes by selling off certain divisions or manufacturing operations," Rice continued.
All that's known for sure is that Motorola hasn't been a big moneymaker. In fact, the unit lost money 14 times in the last 16 quarters and reported second quarter operating losses of $233 million on $1.25 billion in revenue.
For more:
- Reuters has this story
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