Google has sold Motorola Mobility to Lenovo for $2.91 billion.
The press release, verbatim:
Lenovo (HKSE: 992) (ADR: LNVGY) and Google (NASDAQ: GOOG) today have entered into a definitive agreement under which Lenovo plans to acquire the Motorola Mobility smartphone business. With a strong PC business and a fast-growing smartphone business, this agreement will significantly strengthen Lenovo’s position in the smartphone market. In addition, Lenovo will gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its strong, fast-growing smartphone business in emerging markets around the world.
The purchase price is approximately US$2.91 billion (subject to certain adjustments), including US$1.41 billion paid at close, comprised of US$660 million in cash and US$750 million in Lenovo ordinary shares (subject to a share cap/floor). The remaining US$1.5 billion will be paid in the form of a three-year promissory note.
Lenovo, which in 2005 acquired IBM’s PC business and its legendary PC brand, will now acquire world-renowned Motorola Mobility, including the MOTOROLA brand and Motorola Mobility’s portfolio of innovative smartphones like the Moto X and Moto G and the DROID™ Ultra series. In addition to current products, Lenovo will take ownership of the future Motorola Mobility product roadmap.
Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. Additionally Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.
Motorola Mobility enjoys outstanding brand awareness around the world, and is currently the #3 Android smartphone manufacturer in the U.S. and #3 manufacturer overall in Latin America.
“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. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” said Yang Yuanqing, chairman and CEO of Lenovo. “We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business. Lenovo has a proven track record of successfully embracing and strengthening great brands – as we did with IBM’s Think brand – and smoothly and efficiently integrating companies around-the-world. I am confident we will be successful with this process, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future.”
“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,” said Larry Page, CEO, Google.
“As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet. With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo’s hardware expertise and global reach will only help to accelerate this,” said Dennis Woodside, CEO, Motorola Mobility.
The transaction is subject to the satisfaction of regulatory requirements, customary closing conditions and any other needed approvals.
Source: Google
MacDailyNews Take: Google purchased Motorola Mobility in 2011 for $12.5 billion.
Great investment there, Larry and Sergey!
—
$12.5 billion is a lot of money. – Apple CFO Peter Oppenheimer, commenting on Google’s purchase of Motorola Mobility in August 2011
—
In May 2007, Motorola’s then-Chairman and then-CEO Ed Zander once claimed that his company was ready for competition from Apple’s revolutionary iPhone, which was due out the following month:
“How do you deal with that?” Zander was asked. Zander quickly retorted, “How do they deal with us?”
Good thing you’re “spending time with your family,” Ed, or you’d be looking for an apartment in Beijing right about now.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Spark” for the heads up.]
Related articles:
Google’s Motorola Mobility burning cash with increasing rapidity – October 17, 2013
Google cuts 1,200 more Motorola Mobility jobs – March 8, 2013
Google to axe 4,000 employees at Motorola Mobility division – August 13, 2012
Apple CFO Oppenheimer says Google spent ‘a lot of money’ on Motorola Mobility – August 17, 2011
Google to buy Motorola Mobility for $12.5 billion to bolster patent portfolio – August 15, 2011
Beleaguered Motorola’s CEO Zander out; ‘plans to spend more time with his family’ – November 30, 2007
I’m really wondering if I’m reading this right. Is this an article from the Onion?
I was wondering the same thing! This will send a bit of a shockwave through Chicagoland.
Not a great trade but not as bad as first seems.
Motorola Home already sold for over $2 billion. Motorola originally came with $3 billion cash.
Net they’ve ended up paying over $4 billion for the patents – way too much, I figure their mtm on those is no more than $1 billion.
Unfortuneately I think you’ll see Moto xx more like $300 from now on. Shame for consumer.
Your math is wrong and it is in fact as bad as it seems.
The aptness have actually cost Google money because every time they have used them in court that have lost. After millions of dollars in attorney fees.
There are hardly any US employees left at Motorola.
What a debacle for Google. They never wanted the hardware, only he patents which turned out to be worse than useless. Imagine if this was Apple and the hue and cry that would result.
Now watch Gcrookles share price rocket upwards! The reasoning will be that they have curved off any liability that Motorola had and offloaded it off to Lenovo.
The worrying fact is that that statement could be right. What happens to the various lawsuits in motion between Apple inc. Rockstar Consortium V. Google/Motorola?
Google are hanging onto patents that Lenovo more than likely do not want in case of lawsuits but need therefor the licensing of the so called ‘rich portfolio’. But how will the slow moving DOJ act? and when for that matter?
Looks like only the anti-monopolies regulators can do something to prevent a possible breakdown of justice by the circumvention of the mother of all regulatory breeches!
Best take from Daring Fireball:
“I bet it would take longer to literally flush $9.5 billion in cash down a toilet than it took for Google to do so figuratively on the Motorola acquisition.”
Blaaahhhhhhahahahhahaha!!!!
Snot bubbles……
And Google’s stock is up after hours, after losing 10B in a three investment, can you imagine how much Apple’s stock would be down if they did this, my guess is 10% or more, serious ???????
The geniuses really know how to spend shareholder’s money…
Well, in all fairness those geniuses do own over 50% of the Google stock, so they only have to please themselves.
Again, a statement that is not based upon reality but is based upon what some believe.
NONE of the money used to buy Motorola is “shareholder’s money”. NONE. It is Google’s money.
If you’re a holder of GOOG you don’t own, control or have a direct right to any of that money. You may, or may not, get dividends from the company if the Google’s board approves that. There is no law that says the must give you or any other GOOG holder any money, ever.
.
.
Now, as to what has transpired….
Is this not The Smoking Gun that proves Google bought Motorola Mobility just for its patents? Google is keeping nothing but a subset of the patents and is getting a complete cross licensing deal with Lenovo over the Motorola Mobility patents.
Is there anyone with at least two functioning brain cells (leaves out most analyst as they have only one) who does not realize the whole Google/Motorola deal was ALL about the patents?
And, when the patents pretty much proved ineffective against Apple, they decided to fire sale Motorola Mobility at less than 25% of the original cost.
You make a compelling argument. However, it is also possible that they acquired MM to diversify into hardware and build reference devices. When that didn’t catch fire, they stripped it for parts. One part they held onto was the patent trove, for which they still have uses and which conceivably could generate income some day. But the mere fact that it was at the bottom of the pile of pick-up sticks doesn’t prove that the others were secondary.
Ding ding ding! We have a winner. An actual, living, breathing objective human being. Such a rare find in these parts.
Agree with your second point completely, but you’re off base on the first. Shareholders are the owners, and own all assets of the company. They control their company through their elected board of directors, and the appointed executives. The law does hold that the board and executives have a fiduciary responsibility to the shareholders. Losing $10B could well be viewed as a breach of that duty. Just saying.
Google paid 12.50 billion for Motorola, now selling for 2.91 billion. Such a big lost for Google.
Google will report earnings tomorrow and after hours GOOG shoots up $1130.21, closed at $1106.92.
I say again.
Wall Street is a scam.
To be fair, they bought Motorola mostly for patents, and they keep almost all of them.
Interesting thing is that Lenovo buys USA’s companies and their parts: they twice bought parts of IBM, and now they have Motorola.
Next time they will buy chunk of HP. 😉
Google is shucking the patents too. They’re old patents pertaining to the last forty years and nothing among them could help them win a war against Apple.
Google really are a bunch of cowboys!
To be fair, a lot of Indians work there, too.
What a brilliant stroke of genius! Buy GOOG now!
No doubt, the major financial media is reporting this as a great decision.
These are the very same idiots squandering billions of dollars of investors cash on 1500 dollar spy glasses that’ll get you forcibly thrown out of movie theatres.
I’m surprised Google got that much for the company.
At the end of the day, it sounds like Google paid $9.6 billion for the patent portfolio and, with the sale, retained an outlet for Android.
Don’t forget to add in the losses of the last two years.
Google lost 1 billion per year of ownership, about 2.5 billion dollars.
“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team..”
Iconic Brand: I give you that.
Innovative product portfolio: After the Razor phone, none of its phones was innovative anymore, or better say, after Apple pull out the iPhone, Motorola’s innovation was no more.
incredibly talented global team: Yes, the same team that couldnt innovate any more so they had to sell the company to google, who brought it hoping to enforce its patents but it turned out those patents were useless, and now Lenovo have full access to thousands of useless patents. Congrats Lenovo.
For blowing all that money Google shares shoots up 1000%!!! lol
You nailed it Jubei! Pay attention Wall Street and make Google pay big time, and don’t forget Google doesn’t pay dividends either, so make sure you treat Google with the same disrespect you give Apple.
I wonder how many tech analysts/pundits will say this is a good move by Google and it’s bad for Apple?
Apple is a sum of it’s parts.
Google is disjointed beta slum of it’s parts.
Its.
Reality is Samsung probably chipped in a pretty penny too. Seems a little too coincidental that a deal with Samsung was announced just a few days prior to the Motorola sale.
Apple needs to downsize their Stock. Wall street doesn’t like Apple Stock. They like Apple options. They like selling calls and then controlling the price so that the majority expire worthless and they keep the premium. The current Apple stock price allows shorting to run the price down to the desired Strike price every single Friday in the endless, every week, Options expiration. Everything about Apple Stock is contrived. This huge sell off in the face of great earnings is engineered by the big boys looking for something to drive it down. This time it was the number of iPhones sold, It was not the revenue, which was up. If the stock was split say 10 for 1, then Options profits would not control the stock price. Young people would buy the stock, and the Apple Bears would need to find another stock to manipulate. I hope that Apple’s board or Tim Cook would read this post and acting ASAP.
Very good comment! I would have to agree to this as I have been one of the option buyers that was run down before by the big banks of Wall Street.
(As I posted over at Electronista):
Stunning! Stupid Google.
However, I have to hand it to Google for figuring out their grand blunder in a remarkably quick period of time. I also have to consider them lucky to have someone to unload this albatross from their warehouse of crap.
Clue: Never diversify your business into any field that is NOT part of yoru expertise. Throwing money at barely tangible side interests very rarely works. Google is NOT and will never be a viable cell phone company. It’s amazing they ever thought they could be. I suspect they’ve learned a business lesson here. But we’ll see. Next on the list for deletion: Chromebooks. What a joke.
Lenovo will turn around and sell it to RIM for 4 billion 🙂
Challenge Apple, hang the gloves early.
Famed investment manager Peter Lynch coined a word for corporations that get too far away from what they do best, and pay a hefty price for their misguided ambitions: “deworsification.”
I won’t argue that there are some very smart people at Google. There are. But I have wondered if with all the success that Google has attained if there is not also a large streak of hubris in the mix. From self-driving cars to products in perpetual beta (which often disappear quickly) to glasses to buying producers of thermostats and smoke detectors, I’ve wondered if Google, for all its success, brains and glamour, has forgotten that its search algorithms and novel auction approach to advertising is what drives the company’s profits.
There is something to be said for sticking to your knitting, focusing on what you do best and excluding anything else. I have a hunch that Google will spin losing $10 Billion on Motorola in every possible way, and a fawning media will likely go along. Still a $10 Billion charge-off is a LOT of wasted money, and I doubt the remaining patent portfolio is worth even a fraction of that amount. And paying $2.5 Billion for thermostats and smoke detectors was way too much in my book. Still, Google got a pass on that one, too.
At some point, Wall Street will notice.
It’s an object lesson to Apple to stay focused and continue making only small acquisitions that result in a huge return on the company’s investment, something Apple has done very well.
The winner? Lenovo. Somehow, I suspect that pundits won’t see Google as the loser in all this. Such is the way of the world.
Can you imagine if Apple did that, ooooohhhhh, its the end of the world. But Google does it no one gives a crap about it. How in the hell did Amazon and Google spike the cool aide so well that none of the investors care but if Apple says that the 5C gave them a different result, you guys are a bunch of failures. These double-standards are driving me a little mad recently.
Iconic brand, driving innovation, innovative product portfolio, strong global competitor, incredibly talented global team, strong market presence . . .
That’s a lot of buzz words, except for one . . . profitability.
Maybe Icahn should start buying Google stock, they seem more than happy to throw away money.
So now that Google doesn’t own Motorola, does that mean MDN will endorse Droid products the same way MDN trashed Nest products as soon as Google bought Nest?
I know most “fans” here see only that Google sold Motorola for $10B less than it bought it less than three years ago. But no… Sorry guys. Google didn’t lose $10B with this transaction. Far away from it.
The Motorola that has been sold now is not the one that has been bought 3 years ago.
Moto total cost $12.5B to Goog in 2011:
– $3.2B Moto’s 2011 cash
– $2.4B Moto’s 2011 deferred tax assets
– $2.35B Moto’s Set-top-box business sold in 2012
– $75M Moto’s factories business sold in 2013 (incl 7K factory employees)
– $2.91B Moto’s Mobility business sold in 2014
Thus Moto’s remaining assets including patents, buildings (in Chicago and elsewhere), probably a good part of the 12K employees cost Goog $1.56B.
This patent portfolio has certainly been used in the Google-Samsung deal and has also its own value.
Are these $1.56B well invested??? I don’t know but markets seem to think so…
Nasdaq + ~3%
Oh yeah… I forgot… It’s certainly the world conspiracy against Apple.
ARS Technica has a rather insightful article showing the most plausible reason that Google is shifting its course
http://arstechnica.com/gadgets/2014/01/nuclear-stand-down-google-samsung-and-the-sale-of-motorola-mobility/