[dropcap]M[/dropcap]otorola’s smartphone business, which currently functions under Google, is now being sold to Lenovo for $2.9 billion. Do you think it would be the most expensive mistake ever?
Google bought Motorola in 2012 for a whopping $12.4 billion. Motorola skimmed its workforce from 20,000 to 3,800 since Google acquired it and has also lost $2 billion. Thus, letting go off Motorola will take off a financial burden from Google Inc.
Google is playing super smart by keeping all the patents that came along with the Motorola purchase and selling off departments. Last year, Motorola’s set-top operations was sold to Arris Group Inc. for $2.35 billion. The pricing details would come out today when the search giant announces the fourth quarter earnings after the close of market.
With Google clearing off some burden, it’s the right time for Lenovo Group Ltd. to look out for a major expansion. Being the world’s largest personal computers maker, Lenovo is determined to get a hold on the smartphone market now. It has already left its footprints in the home country China. The target now is to expand in markets of Latin America and U.s.
Last week, Lenovo announced its plans to buy a major chunk of IBM Corp’s computer server business at $2.3 billion. The Motorola buy-out would be the secone high-profile deal of the month.
“This makes Lenovo a company to watch,” Forrester Research analyst Frank Gillett said in an email. “The personal device manufacturer business is consolidating – and manufacturers must compete in all three device markets, plus emerging wearable categories, or get left out of the next market shift.”
As per the statements by executives at Lenovo, there are no plans to lay off any more employees at Motorola and the subsidiary would remain based in the current headquarters in Libertyville, Illinois.
“We buy this business, we buy this team as our treasure,” said Lenovo CEO Yang Yuanqing during a Wednesday conference call.
Lenovo will get a hold on about 2,000 Motorola patents along with the phone manufacturing operations.