Google Sells Motorola To Lenovo

1/30/14 10:46AM EST

Google Sells Motorola To Lenovo Google Sells Motorola To Lenovo

Image via Flickr/ andsnleo

Google announced Wednesday that it has agreed to sell the Motorola Mobility smartphone maker to the Chinese PC maker Lenovo.

The deal signifies that Google is giving up on a major investment and cutting its losses. Google has agreed to sell Motorola for $2.91 billion even though it acquired the company for a much higher $12.5 billion just two years ago.

Although Motorola has worldwide brand recognition, it simply hasn’t sold as well as anticipated and has consistently lost money.

This was an under-performing asset and was always a stretch for them,” Mark Mahaney, an analyst at RBC Capital Markets, told USA Today. “They probably never should have gone into the handset business.”

Google’s investors agree, as shares rose immediately after the announcement. Stocks closed at $1,107 yesterday and rose to $1,148 by this morning.

And the flip isn’t a complete loss for Google. The search giant will keep the “vast majority” of Motorola’s extensive patent portfolio, which includes a patent for Android software. The New York Times estimates the portfolio is worth billions of dollars.

Lenovo is pleased with the deal, as well. It will gain about 2,000 patents from the deal and will have license to use the ones that are staying under Google ownership.

Additionally, the BBC reports that the acquisition will make Lenovo the third-largest smartphone manufacturer in the world, behind Samsung and Apple.

The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones,” said Yang Yuanqing, chairman and CEO of Lenovo. “We will immediately have the opportunity to become a strong global player in the fast-growing mobile space.”

 
 
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