Google’s purchase of Motorola Mobility came with an aggressive streamlining of 20 percent of its workforce and one-third of its offices, and the cost cutting continues after Motorola announced on Monday that it has reached an agreement with Singaporean manufacturer Flextronics to sell its production operations in Tianjin, China and handover management of its facilities in Jaguariuna, Brazil.
In a joint statement, the companies revealed that the deal, which is expected to conclude in the first half of next year, will include a “manufacturing services agreement for Android and other mobile devices.”
“We look forward to leveraging our extensive manufacturing expertise and supply chain solutions to provide Motorola Mobility with increased value,” Flextronics CEO Mike McNamara said.
Motorola senior vice president noted that the agreement is an “important step forward” in turning its supply chain into a “competitive advantage”.
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Flextronics boasts operations in 30 countries across four continents. Motorola, meanwhile, is working to cut back on its international reach, having recently announced that it is pulling out of Korea next year. The company has also been shutting down many of its international sites around the world.
The two companies have already enjoyed a working relationship for over a decade. They signed a multi-billion five-year contract back in 2000, but then scaled back on the deal a year later.
Google announced its acquisition of Motorola for $12.5 billion last year and the deal completed in May of this year. The arrangement was largely believed to have been an intellectual property move, since Motorola had a strong patent portfolio, but Google has also pledged to keep Motorola going as an independent Android vendor.
Trimming Motorola back to profitability has been costly. Google told the SEC that it could incur $275 million in restructuring charges during the third quarter of this year. That’s not all, Motorola’s loss in the third quarter, its first as a Google subsidiary, turned out to be $527 million, of which $505 million came from mobile.
Image Credit: Titanas
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