Google has sold off Motorola Mobility to Lenovo for $2.91 billion in cash and stock.
Last week, it was reported that Lenovo took another chunk out of International Business Machine Corporation’s (IBM) by taking over the company’s x86 server unit for $2.3 billion. Now the China-based tech juggernaut is at it again, this time it’s cutting for itself a big piece of the mobile pie.
You get the brand, I keep the IPs
Motorola Mobility will go to Lenovo for $2.91 billion in cash and shares, as Google doesn’t want to continue to hemorrhage money from its mobile pet. Google will get $660 million in cash and $750 million in ordinary Lenovo shares when the deal closes, and the rest of the $1.5 billion will trickle in through a three-year payment term.
Although Motorola Mobility will operate under the Lenovo brand, Google is still strongly attached to the patent portfolio that it invested over $12 billion into in 2011. By strongly attached, we mean Google still owns many of these patents, even if they’re not bringing in as much royalties as the search giant was hoping they would.
Drop it like it’s hot… (in this case, cold)
Internal sources reported on a few occasions that Google wanted to get rid of the underperforming division, but held off on doing so due to tax reasons. Just last quarter alone the company said its Motorola Mobility unit lost $248 million, and that trend doesn’t seem like it’s going to change—at least not under the leadership of Google.
Lenovo has been pushing hard for the mobile space, and the Motorola Mobility acquisition may become a crucial part of that move. If history is of any indication, Lenovo will likely make use of Motorola Mobility—more so than what Google has been doing with it within the last two years.
What you can do, I can do better
In 2005, Lenovo shotgun its PC business by buying IBM’s personal computer division for $1.25 billion. After a decade of brand leveraging, Lenovo edged out Hewlett-Packard (HP) to become the largest shipper of PCs in the world.
What’s in store for Motorola Mobility? Hopefully, with Lenovo’s proven track record, we’ll see something good from the ‘M’ within a few months.