Google has just announced that it will be offloading the loss-making Motorola Mobility smartphone business to Chinese OEM Lenovo in a deal valued at about $2.91 billion.
In a post on his company's official blog, Google CEO Larry Page officially announced that Lenovo would be acquiring Motorola Mobility to push Android further with its global reach and manufacturing prowess. Larry said, “Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem. They have a lot of experience in hardware and they have global reach. In addition, Lenovo intends to keep Motorola’s distinct brand identity--just as they did when they acquired ThinkPad from IBM in 2005.”
Google purchased Motorola Mobility, the handset division of Motorola, for $12.5 billion in May 2012, but is now offloading it to Lenovo for a fraction of the price. According to the Google investor relations site, the transaction will be carried out in cash and stock. Lenovo will get control of the Motorola Mobility brand and 2000 patents, however, Google would maintain ownership of the remaining patent portfolio and will license them to Lenovo.
Motorola Mobility has consistently lost money for Google, reporting a total operating loss of $248 million in the the third quarter of 2013. Google initially purchased the company to make use of its valuable communications patents against competitors but after losing majority of lawsuits involving Android, Google seems to have given up on keeping the failed handset division.
Image via Motorola