Google sells beleaguered Motorola Mobility to Lenovo for $2.91 billion

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

46 Comments

  1. 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.

  2. 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.

  3. (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.

  4. 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.

  5. 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.

  6. 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.

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