WASHINGTON: Google has agreed to sell Motorola to Chinese technology giant Lenovo for $2.91 billion, after a lackluster two-year effort to turn around the smartphone maker it bought for $12.5 billion.
The deal ends Google’s run as a handset maker after it biggest-ever takeover, which was announced in 2011 and finalized in 2012.
It also provides Lenovo footholds in smartphone and tablet markets where it is eager to gain traction while acting as a peace offering to Samsung and other partners that make devices powered by Google-backed Android software.
“It is win-win,” said analyst Tim Bajarin of Creative Strategies in Silicon Valley. “Google keeps the patents and the research group, and they keep partners off their back, while Lenovo gets what they need to get into the US smartphone market.”
The deal comes just a week after Lenovo said it will buy IBM’s low-end server business for $2.3 billion, giving it a platform to compete in that sector with US giants Dell and Hewlett-Packard.
However, Lenovo’s Hong Kong-listed shares dived 8.21 percent to HK$10.06 on Thursday as investors were spooked about Motorola’s profitability.
Even under Google, Motorola failed to gain traction in a rapidly evolving smartphone market now dominated by South Korea’s Samsung and US-based Apple.
Google and Lenovo claimed the deal was good for everyone involved.
“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem,” Google chief executive Larry Page said in a statement.