The deal announced on Wednesday will rid Google Inc. of a financial headache that has plagued the internet company since buying Motorola Mobility for $12.4 billion in 2012. Motorola has lost nearly $2 billion since Google took over, while trimming its workforce from 20,000 to 3,800.
Google had previously recovered some of the money that it spent on Motorola by selling the company’s set-top operations last year to Arris Group Inc. for $2.35 billion. Google is also keeping most of the patents that came with the Motorola purchase.
While Google is backpedaling, Lenovo Group Ltd. is gearing up for a major expansion. Already the world’s largest maker of personal computers, Lenovo now appears determined to become a bigger player in smartphones as more people rely on them instead of laptop and desktop computers to go online.
Lenovo already is among the smartphone leaders in its home country of China, but it has been looking for ways to expand its presence in other markets, especially the US and Latin America.
This marks Lenovo’s second high-profile deal this month. The company announced plans last week to buy a major piece of IBM Corp.’s computer server business for $2.3 billion.
Buying Motorola will enable Lenovo to join Apple Inc. as the only major technology companies with global product lines in PCs, smartphones and tablets, putting Lenovo in a better position to become a one-stop shop for companies to buy all their devices from the same vendor, said Forrester Research analyst Frank Gillett.
After it takes over, Lenovo plans to retain a Motorola management team led by Dennis Woodside. Google had reassigned Woodside, one of its top executive, to run Motorola Mobility in hopes he could engineer a turnaround. Under Woodside, Motorola released two new smartphones last year, the Moto X and Moto G. The phones attracted lots of headlines, but didn’t sell as well as anticipated, analysts say.
“We buy this business, we buy this team as our treasure,” Lenovo CEO Yang Yuanqing said during a Wednesday conference call.
Google is retaining most of Motorola’s portfolio of mobile patents, providing the company with legal protection for its widely used Android software for smartphones and tablet computers.