Google completes purchase of Libertyville’s Motorola Mobility
The Motorola plant located at 600 N. Highway 45 in Libertyville. | Thomas Delany Jr.~ Sun-Times Media
Updated: June 5, 2012 12:27PM
Google Inc. on Tuesday completed its $12.5 billion acquisition of phone maker Motorola Mobility Holdings Inc. and said it has appointed a Google executive as the new CEO of the business.
Dennis Woodside, previously president of Google’s Americas region, is Motorola’s new CEO. Departing CEO Sanjay Jha will help to ensure a smooth transition, Google said.
Woodside, like Jha, doesn’t appear to be moving to the Chicago area. Motorola Mobility spokeswoman Jennifer Weyrauch-Erickson said Tuesday Woodside “will be spending his time at our key locations, including Libertyville and Sunnyvale, Calif.”
Illinois officials expressed concern that local workers’ jobs were at stake when the acquisition was first announced in August 2011. That August announcement followed by less than eight months Motorola’s split into two companies — Mobility and Solutions — and just three months after the state agreed to provide $100 million in tax credits over 10 years to Motorola Mobility to retain its headquarters in Libertyville and a workforce of at least 2,500. In October 2011, Motorola Mobility said it would cut 800 jobs worldwide, including 185 in downtown Chicago and in Libertyville, but noted that the downsizing had nothing to do with the Google deal.
Motorola officials have said they are committed to spending more than $500 million in research and development over the next three years and are hopeful those investments will lead to more jobs in Libertyville in the future.
But experts say turning around Motorola Mobility will require layoffs, a painful process that belies Google’s carefully cultivated image as a cuddly employer. Google laid off about 300 people after it paid $3.2 billion to acquire online advertising service DoubleClick Inc. in 2008, up until the biggest deal in the company’s history. The cutbacks represented about one-quarter of the workforce that Google inherited from DoubleClick. If Google imposes a similar reduction on Motorola Mobility’s 20,500-employee payroll, it would translate into about 5,000 layoffs.
Taking on so many new employees also raises the risk of culture clashes with the 33,000 people already working at Google.
Motorola had no update on the local jobs situation on Tuesday.
Big changes are already afoot at Motorola Mobility’s top levels, however, as the company unveiled a list of six new executives.
Woodside, the new CEO, is credited with spearheading Google’s investment across Europe, the Middle East and Africa, markets that boasted a 20-fold increase during his tenure. Revenues grew to more than $2 billion.
Most recently, Woodside was responsible for Google’s sales and operations in North America and Latin America. He also was the lead business partner for Google’s advertising product development team, helping launch new ad products globally.
Mark Randall is joining to lead supply chain and operations. He played senior roles at Nokia and most recently Amazon, where he built the supply chain that produced the Kindle and Kindle Fire.
Regina Dugan is joining to start a new advanced technology and projects group to focus on breakthrough innovation. She joins from her role as director of DARPA, the organization that develops advances for national security.
Gary Briggs will lead marketing. He led marketing at eBay and most recently ran Google’s consumer marketing.
Vanessa Wittman will be chief financial officer, after having most recently been CFO at Marsh & McLennan.
Scott Sullivan will lead “people operations.” He most recently led human resources for Visa, and before that ran global human resources at Nvidia.
The deal is Google’s largest acquisition ever, and pushes it deeper into cellphones. Google is already a formidable force in mobile computing thanks to its Android software, the chief challenger to Apple Inc. and its iPhones.
At the same time, the acquisition is largely a defensive one. Google needs Motorola’s trove of 17,000 cellphone patents to defend Android phones against lawsuits by Apple, which accuses them of copying iPhone features.
Google and Motorola announced the deal last summer, expecting it would close late last year or early this year.
But approval from Chinese regulators was slow in coming. On Saturday, China approved the deal, on condition that Google Inc.’s Android software would remain free for other phone makers for at least five years. Regulators in the U.S. and Europe had cleared the deal three months ago.
The acquisition will also test Google’s ability to keep its business partners, shareholders and employees happy as it moves beyond Internet search and other services built on software to begin manufacturing a wide range of equipment for the first time.
Google has been reassuring its Android partners that Motorola’s devices won’t get souped-up versions of the software or receive other preferential treatment.
Although it initially was drawn to Motorola Mobility for its patents, Google has been signaling recently that it has been drawing up more ambitious plans for Motorola Mobility. Besides producing smartphones and tablet computers, Motorola Mobility also makes cable-TV boxes that could provide Google with a springboard for delivering more of its services, including advertising, to living rooms. However, cable companies control the market for set-top boxes, and they may not like the intrusion into their realm.
Macquarie Securities analyst Benjamin Schachter believes Google is particularly interested in developing a snazzier tablet computer powered by its Android software to compete against Apple’s hot-selling iPad and Amazon.com Inc.’s Kindle Fire.
The company also will likely have to do some hand-holding with investors who have already been fretting about Motorola Mobility’s troubles eroding Google’s hefty profit margins.
As its line of smartphones has waned in popularity, Motorola Mobility has suffered losses totaling $1.7 billion during the past three years. Google has earned a total of $25 billion over the same stretch. The contrasting fortunes of the two companies is one reason why CEO Larry Page has decided to operate Motorola Mobility separately so it will be easier for investors to track how the different lines of business are faring.
Google shares fell $5.69 to $608.41 in morning trading Tuesday. They are still near their 52-week high of $670.25 per share set in early January.