Google to offload Motorola Mobility to Lenovo

30 JAN 2014

Google announced a deal to sell its Motorola Mobility unit to fast-rising Chinese player Lenovo for $2.91 billion, following its acquisition of the troubled handset maker in 2012.

Lenovo said the deal will give it a “strong market presence in North America and Latin America”, as well as a “foothold” in Western Europe, to complement its own smartphone business in emerging markets worldwide.

The Chinese company is acquiring the Motorola brand, the US company’s existing products including Moto G, Moto X and Droid Ultra, and the future Motorola Mobility product roadmap.

According to research firm Strategy Analytics, the combined Lenovo/Motorola will have a smartphone market share of 6 per cent, putting it in third place – but well behind rivals Samsung (32 per cent) and Apple (15 per cent).

On its own, Lenovo captured fifth pace, with less than one point separating it from third-placed Huawei and fourth-placed LG.

While Lenovo’s own success has been built on its efforts in China and in emerging markets, in recent years Motorola has seen its operations shrink to become Americas-centric.

In a blog post, Larry Page, CEO of Google, said: “The smartphone market is super-competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo – which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world.”

Google will retain ownership of the “vast majority” of the Motorola patent portfolio, with Lenovo receiving a licence to this. According to reports, it will also hold on to Motorola’s Advanced Research Group.

Google acquired Motorola Mobility in May 2012 for $12.5 billion, and in the meantime has seen a continuing run of operating losses for the business.

The $12.5 billion figure, however, included around $3 billion in cash held by Motorola, $1 billion of tax credits, and in the meantime it has sold Motorola’s home business to Arris group for around $2.35 billion.

Taking out the $2.91 billion proposed by the Lenovo deal, this means that Google paid around $3.2 billion for Motorola’s patents and Advanced Research unit – below the $4.5 billion paid by the Rockstar consortium for Nortel’s intellectual property.

But the value of both the Rockstar and Motorola patents have been questioned in recent months.

In Google’s case, FOSS Patents said that with no injunctions in place worldwide against Apple or Microsoft, “the Motorola Mobility deal has not been able to bring patent peace”.

And Google’s activities with regards to FRAND patents has brought it under the scrutiny of regulators.

Lenovo has previously been linked with an acquisition of BlackBerry and tie-ups with NEC and HTC – none of which came to fruition.

The deal is subject to regulatory approvals and other closing conditions.

  • Mauri Privacy

    Greg Brown, Sanjay Jha, and the Motorola Board in cohorts with their investment banker advisors really did service themselves by profiting in the split of Motorola. The adulteration of the Motorola brand and its heritage for innovation is now a cemeterial remembrance of a once American wireless company. The handset division, e.g. Motorola Mobility, should of just been divested just like Motorola did with its semiconductor, lighting, cellular infrastructure, consumer modems, and TV set-top box businesses, while preserving the integrity of Motorola. Another shameful hubris act of corporate America and Wall Street.

    • Luis

      Shame of you GOOGLE you selling our Country and Jobs to the Chinese people you Killing Our Heritage .
      We need to boycott Google and do not use them , everything you do whit GOOGLE will be in the Chinese hands
      Boycott Now GOOGLE BEFORE IS TO LATE !!!

  • Jan Haije

    IBM bought Motorola. Simple.

  • BlackJerry

    Motorola Mobility won’t survive on its own. Similar situation happened in Nokia. It is easy to blame corporate America. But it is much harder to come up with a viable business strategy, and execute it.

  • PaulW

    This came out of left field yesterday. I’m really disappointed as I felt that Motorola was getting back into the handset mark with good quality budget fones like the Moto G and X. I hope Lenovo keeps the Motorola brand but I suspect not,. Now what happens to the 2000 works at the Texas plant??

  • Better Days

    Not sure how the calculation is made in the article, also because Google left on the ground over 2 billion in Moto operating losses in the process. That said, 2.9 billion is a ridiculous sum to pay for Motorola assets net of the patents i.e. nothing!. Lenovo is only paying for the patent licensing and the relevant protection this is bringing to them, as otherwise they would have no ways to enter any markets where IPR is properly protected


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