Motorola Mobility is laying off about 700 employees in the Chicago area, representing about 23 percent of its local workforce, as part of broader job cuts and restructuring measures announced on Monday.
After the local layoffs, Motorola Mobility will employ about 2,300 people in Libertyville and Chicago, Motorola Mobility spokeswoman Jennifer Erickson said. The Libertyville-based smartphone maker is laying off 20 percent of its 20,000-strong global workforce, affecting 4,000 employees worldwide, Google Inc. disclosed Monday in a filing with the U.S. Securities and Exchange Commission. The Mountainview, Calif.-based search giant acquired Motorola Mobility in May for $12.9 billion.
The disclosure comes less than one month after Motorola Mobility and Mayor Rahm Emanuel made a high-profile announcement about the company moving its headquarters and 3,000 employees from Libertyville to the Merchandise Mart in 2013.
Last year, Motorola Mobility agreed to retain a local workforce of 2,500 workers and make $600 million in investments in exchange for tax credits of more than $10 million a year for 10 years. The layoffs announced on Monday will drop Motorola Mobility's Chicago-area workforce below the 2,500-worker threshold needed to qualify for state incentives, Erickson said.
Those incentives "will be suspended until we have at least 2,500 again," she said.
Erickson declined to provide details on which types of workers will be affected locally. Most of the 3,000 local employees are engineers, the company had said last month when touting the headquarters move.
The company is in the process of notifying the workers who will lose their jobs, a process that will continue through mid-week.
In its regulatory filing, Google said Motorola Mobility also plans to "close or consolidate" about one-third of its 90 facilities and simplify its portfolio to focus on "more innovative and profitable devices" instead of lower-end feature phones. Dennis Woodside, the chief executive of Motorola Mobility, had hinted at this product strategy when he took over from Sanjay Jha in May, saying he wanted to focus on "fewer, bigger bets."
The restructuring is aimed at restoring profitability at Motorola Mobility, Google said, noting that the company has lost money in 14 of the last 16 quarters. The filing warned that Motorola Mobility would show "significant revenue variability for several quarters."
Google also said Motorola Mobility will be "providing generous severance packages" to affected employees. The Mountainview, Calif.-based company said it expects to take a severance charge of about $275 million, most of which will hit in the third quarter. Additional charges related to the restructuring will also be recognized during that quarter and "could be significant," the filing said.
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