Lenovo buys Motorola Mobility from Google for US$2.91 billion

By on

Moto X

With Google’s new Motorola division losing millions each quarter, it’s no surprise that the company, and its investors, want change. Today, that change has arrived, with Google selling Motorola Mobility, the mobile device division of Motorola, to Lenovo for US$2.91 billion, giving Lenovo a major US presence for the price of just 2.91 Instagram’s.

Their total losses aren’t as damaging as it may look

Selling for a fraction of the original US$12.5 billion that Google paid for Motorola, the company has been losing hundreds of millions through the division in recent quarters. The sale, while a surprise, isn’t exactly unexpected. Google had already sold Motorola’s set-top box unit for US$2 billion and Motorola – at the time of purchase – had US$3 billion on hand and tax credits worth $1 billion, meaning their total losses aren’t as damaging as it may look.

“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere,” Google’s CEO Larry Page said in a statement.

Google will retain a majority of Motorola’s patent portfolio, its original intention from the purchase of the company, while the sale will include a transfer of 2000 patents to Lenovo, as well as licences for the remainder. The patent portfolio didn’t draw the royalty revenue that Google or Motorola originally expected, but they will continue to have value through their protection of Google in past and future patent trials.

The sale will be completed through US$660 million in cash and US$750 million in stock, as well as US$1.5 billion to be paid within the next 3 years.

Google’s sale will serve as Lenovo’s second attempt to crack the US phone market, originally attempting to buy BlackBerry in late 2013. The deal will need to be approved by the Committee on Foreign Investment in the United States, with The New York Times reporting that this will likely go through.

“We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” Lenovo’s chairman and CEO Yang Yuanqing said in a press conference.

With a quarterly earnings report due for tomorrow, Google’s news of the sale will cushion a soft quarter for the company. Investors questioning the losses of Motorola will also be pleased to see the sale go through, with the majority of Motorola’s patent portfolio still in Google’s possession.

For device owners, the future of the Moto X and Moto G is uncertain. Motorola’s refreshed handset business, with the Moto X and Moto G, only existed in the US until recently, however just days ago the company announced a local release of the Moto G.

The phone is already on shelves, however software support, and future devices may already be on the chopping block. It’s up to Lenovo to decide what to do with the company’s legacy, as well as its future.

Terence Huynh contributed to this report.

ORIGINAL STORY [8:29am]

With Google’s new Motorola division losing millions each quarter, it’s no surprise that the company wants change. However, if Reuters and China Daily reports are correct, that change might be a complete sale of the mobile company to Chinese technology company Lenovo.

Reuters is reporting that the company will be sold for US$3 billion, a fraction of the original US$12.5 billion that Google paid for the company. This estimate has been mirrored by China Daily, which reports that the deal will be worth over US$2 billion. A mix of cash and stock will be used by Lenovo to pay for the sale.

With Google originally only interested in Motorola Mobility’s patent portfolio, the sale may only include handsets, with just a small portion of the patent portfolio changing hands. Motorola’s refreshed handset business, with the Moto X and Moto G, only existed in the US until recently, however just days ago the company announced a local release of the Moto G. The phone is already on shelves, so this may have little impact on that device and its future, but the future of the Moto X and Moto G is up to Lenovo to decide.

The sale is expected, according to China Daily, to be announced in a few hours. It’s currently 5:37AM in Beijing, with the deal to be announced in the same day.

Stay tuned for official announcements right here on TechGeek if and as they happen.