Google warns of costly Motorola redundancies

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Google warns of costly Motorola redundancies

Bill rises to $300m, could increase more.

Google has warned the cost of layoffs at subsidiary Motrola Mobility may increase by a further $40 million over the next quarter as it warned of "significant" additional charges from further restructuring at the smartphone maker.

Severance-related charges at its mobile phone unit will be nine percent higher than initially thought, at $300 million. The bill could rise by a further $40 million in the quarter after the exit of facilities and markets.

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.

"Motorola has continued to refine its planned restructuring actions and now expects to broaden those actions to include additional geographic regions outside of the US," the company said in a statement this week.

Google's broader plan for the money-losing cellphone maker remained unclear.

A spokeswoman said the company was not announcing additional job cuts.

Shares of Google were up 0.7 percent at $US767.65 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 and Samsung.

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."

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 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.

The world's number one 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 and Facebook, whose long-term money-making capabilities are less clear, say analysts.

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