After all the hoo-hah about Google buying phone giant Motorola, the company is selling it again at a seeming massive loss.
The New York Times commented that Google chief Larry Page, likes to talk about “big bets” and “moonshots.” “But the thing about moonshots is that "they can crash into earth".
Google is selling Motorola Mobility, the cellphone maker, to Lenovo for $2.91bn. Two years ago it paid $12.5bn to acquire it.
Motorola was Google’s biggest acquisition and was said to be an example of the big bets Page was unafraid to make.
Yet Motorola has continued to bleed money, "aggravating shareholders and stock analysts, and its new flagship phone, the Moto X, did not sell as well as expected," said the Times.
It’s not a total financial loss for the “extremely wealthy Google,” says the NYT.” In addition to keeping billions of dollars’ worth of patents, it essentially turned Lenovo into a factory for its Android operating system, and also picked up some cash. "
Google retains about 15,000 of the 17,000 patents it acquired as part of its original deal for Motorola, and will grant Lenovo a license to use some of them. The patents were the most valuable part of the acquisition, said some analysts, worth several billion dollars alone in firepower as Google to defend its Android mobile operating system.
ZDNet commented: ”So, it turns out that Google's Motorola Mobility purchase was really about the patents after all."
They have helped in cross-licensing agreements with other companies, including one Google and Samsung announced on Monday.
Google’s share price climbed 2% in after-hours trading after the announcement, a day before the company was set to announce its fourth-quarter earnings. “Motorola’s been a millstone and a drag on results,” . said analyst Colin Gillis. “You’re slipping the millstone off your neck.”
The NYT commented, however, that the sale was s a sign of the fits and starts Google is experiencing as it navigates business in the mobile age, which has upended technology companies of all types.”
Lenovo, the world’s biggest PC company, is buying itself a toehold in the fast-growing smartphone business during a worldwide slowdown in PC sales. It is also getting overnight brand recognition in the West.