Google sells cut-price Motorola to Lenovo for £1.7bn

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Google takes a £6 billion hit on Motorola Mobility less than two years since paying £7.5 billion for the handset business

Google has agreed to sell Motorola Mobility to Chinese hardware manufacturer Lenovo for just £1.75 billion.

The deal represents a £6 billion loss for Google, which purchased the handset business from Motorola in 2011 for £7.54 billion in what was then its biggest acquisition to date.

Google will keep the vast majority of the 17,000 Motorola Mobility patents it acquired with the purchase two years ago. Lenovo will pick up some 2,000 patent assets, as well as the Motorola Mobility brand and trademark.

The transaction is still to be approved by US and Chinese regulators.

Motorola Mobility has made around $2 billion in losses since Google took over, as well as trimming its global workforce from 20,000 to 3,800.

However, in a conference call, Lenovo chairman and CEO Yang Yuanqing said there were no plans to lay off any more staff, with the subsidiary remaining at its current HQ in Libertyville, Illinois.

“We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” he added.

Motorola has attempted to rebuild its smartphone portfolio in recent weeks, with the release of the Moto G in November and Moto X this month.

Google CEO Larry Page said: “The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo. This move will enable Google to devote our energy to driving innovation across the Android ecosystem.

“This does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry.

“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.”

It is the second major acquisition for Lenovo in the past week. Last Thursday, it acquired IBM’s low-end server business for $2.3 billion, in what was then China’s biggest technology deal.

 

 

 

 

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