Google workers get cells, not cash

Google Inc., owner of the world’s most-used search engine, is giving employees cellphones instead of cash gifts this year as it reins in costs during the recession, according to a person familiar with the matter.

About 85% of workers will get a handset powered by Google’s Android operating system as a holiday gift, said the person, who asked not to be identified. Google handed out $1,000 cash gifts to most employees last year.

Chief Executive Eric Schmidt said last month that Google is seeking to control expenses and add fewer jobs as the global slump curbs online advertising growth. T-Mobile USA Inc. began marketing the G1 Android phone in October, offering many of the same features as Apple Inc.’s iPhone, including Web browsing. The holiday gift is separate from the performance bonus handed out by the company, the person said.

“The current economic crisis requires us to be more conservative about how we spend our money,” Mountain View, Calif.-based Google said in an internal memo that was posted on technology industry blog Valleywag.

The memo lists 17 countries where the phone won’t work, including Brazil, Russia, India and China. Employees in those countries will receive about $400, Google said in the memo.

Google shares rose 91 cents to $298.02 in trading Tuesday. The stock has lost 57% this year.