Google is selling Motorola Mobility to Lenovo, giving the Chinese smartphone manufacturer a major presence in the US market. Lenovo will buy Motorola for $2.91 billion in a mixture of cash and stock. Google will retain ownership of the vast majority of Motorola's patents, while 2,000 patents and a license on the remaining patents will go to Lenovo. At the deal's closing, Lenovo will pay Google $660 million in cash and $750 million in stock, while the remaining $1.5 billion will be paid out over three years.
Lenovo CEO Yang Yuanqing said that although his company doesn't have "an effective plan yet," it has confidence that it can turn the currently unprofitable Motorola's fortunes around. Yuanqing also stated that, within a year of the Motorola acquisition, Lenovo expected to sell 100 million smartphones worldwide. In 2013, Lenovo shipped an estimated 45 million smartphones, a 90 percent growth from the previous year.
GOOGLE BELIEVES LENOVO CAN TURN MOTOROLA INTO "A MAJOR PLAYER WITHIN THE ANDROID ECOSYSTEM."
"Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem," Google CEO Larry Page said in a statement. "This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere."
Google initially bought Motorola Mobility for $12.5 billion back in 2012, but it said at the time that it was mainly interested in the company's patent portfolio. Now, Google is offloading its subsidiary's handset business, which has been losing hundreds of millions each quarter since the purchase. Google will hold on to Motorola's ambitious Advanced Technology and Projects group, however, and it previously sold off Motorola's set-top box unit for over $2 billion.
Though patents are a large part of what drew Google's interest to Motorola in the first place, those patents haven't been as helpful as Google initially hoped. Google seems to have highly overvalued Motorola's portfolio, which hasn't been able to bring in nearly as much in royalties as either company seemingly expected. It also hasn't been able to use those patents very aggressively, seeing them fail when used in an attempt to block sales of the iPhone. The entire ownership of Motorola has been something of a headache for Google, and it appears that it's finally time for Google to cut its losses.
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Post By : Xenus Kamel
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