Google sells unprofitable Motorola to Lenovo

30 January 2014
By Tereza Pultarova
Mobile version
Share |
Google's acquisition of Motorola was said to be unprofitable

Google's acquisition of Motorola was said to be unprofitable

Google has sold Motorola Mobility’s smartphone business it acquired two years ago to Lenovo, pulling a plug on an unprofitable venture that has cost billions.

While the US technology giant will make $2.9bn (£1.7bn) for selling the smartphone maker to the Chinese technology corporation, Google itself bought Motorola for $12.4bn (£7.5bn) in 2012 in the biggest acquisition in its 15-year history.

For Lenovo, the move represents another step in the company’s strategy to expand its business and become a major player in the global smartphone market. Lenovo has already been successfully selling smartphones in its home country, but eyes the US and Latin American market.

"We will be going from an emerging market player to a worldwide player in smartphones," Lenovo chief executive Yang Yuanqing said.

Buying Motorola will enable Lenovo to join Apple as the only major technology companies with global product lines in PCs, smartphones and tablets, putting Lenovo in a better position to become a one-stop shop for companies to buy all their devices from the same vendor. Lenovo plans to keep both smartphone brands, selling under Motorola's name in developed markets and under its own in developing countries where it already is established, officials said.

Earlier this month, Lenovo announced another high-profile deal, buying a major piece of IBM's computer server business for $2.3bn dollars (£1.4bn).

Google’s main motivation to buy Motorola back in 2011, already in loss at the time of the purchase, was its 20,000 mobile patents, providing Google with legal protection for its widely used Android software for smartphones and tablet computers.

The Motorola patents were valued at $5.5bn (£3.3bn) at the time Google took over, according to regulatory filings. While Google is keeping some of the patents, about 2,000 of those will go to Lenovo together with the smartphone business.

Google already got rid of Motorola’s set-top operations by selling it to Arris Group for $2.35bn dollars (1£.42bn) last year.

Most investors considered Motorola as an unnecessary drain on Google's profit, a perspective that was reflected by Wall Street's reaction to the sale. Google's stock gained 28.08 dollars, or 2.5 per cent, to 1,135 dollars in extended trading.

A mobile pioneer, Motorola Mobility had its last big hit with the Razr flip phone, which came out in 2004. Its product line became outmoded after Apple released the iPhone in 2007, unleashing a new era of touch-screen phones. Motorola has not been able to catch up yet, even though last summer's Moto X received positive reviews.

Motorola's losses are likely to dampen Google's earnings at least for the first half of this year because it is expected to take six to nine months before the proposed sale gets the necessary approvals from regulators.

Latest Issue

E&T cover image 1607

"As the dust settles after the referendum result, we consider what happens next. We also look forward to an international summer of sport."

E&T jobs

  • Design Delivery Leader, Palace of Westminster Restoration & Renewal (R&R) - Engineering Lead

    House of Commons
    • City of Westminster, London (Greater)
    • Circa £65,000 (There may be more for an exceptional candidate)

    You will lead on a number of engineering infrastructure and associated workstreams under direction from the Deputy Director

    • Recruiter: House of Commons

    Apply for this job

  • Senior Engineer, Network Equipment

    Energy Networks Association
    • Westminster
    • £49-58k per annum, dependent on experience

    Manage issues and working groups relating to all types of equipment and assets used on the UK Transmission and Distribution Networks.

    • Recruiter: Energy Networks Association

    Apply for this job

  • Programme Manager, Network Resilience

    Energy Networks Association
    • Westminster
    • Competitive salary, dependent on experience

    Co-ordinate the network resilience, emergency planning and the Single Electricity Number (SEN) work in the ENA Engineering team.

    • Recruiter: Energy Networks Association

    Apply for this job

  • Assistant Professor (Tenure Track) of Smart Building Solutions

    Premium job

    ETH Zurich
    • Zurich, Canton of Zürich (CH)

    The successful candidate is expected to develop a strong and visible research programme in the area of control and diagnostics of building systems

    • Recruiter: ETH Zurich

    Apply for this job

  • Process Controls Leader

    Premium job

    Phillips 66
    • Humber Refinery, South Killingholme, North Lincolnshire DN40 3DW
    • £60k - 75k plus extensive Compensation and benefits package, dependent upon experience

    Experienced Process Control Leader providing leadership and technical support for Oil Refinery. Extensive Compensation and benefits package.

    • Recruiter: Phillips 66

    Apply for this job

  • Regional Technical Support Manager

    Premium job

    Siemens
    • Warwick, Warwickshire

    You will be required to lead the regional Customer Services strategy and resources to maximise Customer satisfaction.

    • Recruiter: Siemens

    Apply for this job

  • Communications Engineer

    BAE Systems
    • England, Hampshire, Portsmouth
    • Negotiable

    Communications Engineer Would you like to play a key role supporting the UK's Maritime Communications Infrastructure? We currently have a vacancy for a Communications Engineer at our site in Portsmouth. As a Communications Engineer, you will be carrying o

    • Recruiter: BAE Systems

    Apply for this job

  • MetOp-SG Receiver Project Manager

    Science and Technology Facilities Council (STFC)
    • STFC Rutherford Appleton Laboratory, Harwell, Oxfordshire
    • £37,213 - £50,926 (depending on experience)

    Project Manager to oversee the development, production and test of spaceflight components and integrated receiver systems

    • Recruiter: Science and Technology Facilities Council (STFC)

    Apply for this job

  • Financial Controller

    MBDA
    • Stevenage
    • Competitive Salary & Benefits

    An opportunity has arisen to manage a diverse range of financial controlling activities within the Equipment Team (ET) and newly Centres of Excellence (CofEx) function...

    • Recruiter: MBDA

    Apply for this job

  • Weapon System Product Support Manager

    MBDA
    • Stevenage
    • Competitive Salary & Benefits

    The Opportunity An opportunity has arisen within MBDA?s Customer Support & Services organisation for a strong competent leader to deliver a key Weapon capability primarily...

    • Recruiter: MBDA

    Apply for this job

More jobs ▶

Subscribe

Choose the way you would like to access the latest news and developments in your field.

Subscribe to E&T