Google sells Motorola 2

Google is selling Motorola to Lenovo for $2.91 billion

When I saw the rumors earlier Wednesday that Google was going to sell Motorola Mobility to Lenovo I didn’t believe it – I thought wires were crossed and a strategic partnership was being misinterpreted and leaked as an acquisition for the Chinese company. Surely, Google wouldn’t sell a mobile phone company at a fraction of what it cost to buy it last year, especially since the Motorola brand has undergone a resurrection of sorts with the Moto X and Moto G. Unfortunately, that’s exactly what happened as Google and Motorola both announced the deal an hour or so after the rumors leaked.

When Google first spent $12.5 billion on Motorola last year, they said they were interested mainly in Motorola’s patent portfolio. Indeed, Google will retain the lion’s share of those patents in its deal with Lenovo, but they have thus far proved to be nearly worthless as one court after another denied Google’s attempts to use them for legal leverage (or awarded Google a minuscule fraction of what they were hoping for in royalties).

This leaves Google with roughly a $7 billion loss, as its sale of Motorola’s set-top box division to Arris was valued at roughly $2.4 billion between cash and stocks, and the Lenovo deal is expected to bring Google a total of $2.9 billion.

It’s a boon for Lenovo, of course – the Chinese company’s mobile division gets a huge foothold in the U.S. just as Motorola’s brand is on the upswing thanks to its innovative user-experience-oriented Moto X and its impressive-specs-for-a-bargain-price Moto G. Also, we could see Motorola phones entering the Chinese market.

Just as one wonders what Google was thinking when it paid $12.5 billion for Motorola last year, one has to wonder why Google is selling it at a huge loss just as its brand was recovering from years of mediocrity. It’s especially puzzling in view of the weakness of Motorola’s patent portfolio. Perhaps Google had to divest itself of Motorola because of its cross-licensing deal with Samsung (two of Apple’s litigation doormats joining forces – let me know how that works out).

Sources: Google, Motorola via The Verge

Update: Levi Wilcox pointed out on our Google+ thread that Google might not have actually taken a $7 billion hit with the sale of Motorola to Lenovo. According to an article on Forbes.com he found, Google may have had a net cost of only $1.5 billion for Motorola when you factor in Motorola’s tax losses shaving a big chunk of Google’s tax bill in addition to the sale of the set-top box division to Arris.

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