For all its talk of being interested in the smartphone hardware business, $2.9 billion seems like a price Google couldn't refuse.
That much at least is clear from Wednesday's surprise purchase by Chinese computer maker Lenovo of the Motorola business from Google. Google is retaining the "vast majority" of Motorola's patents and previously sold the business's set-top box operation for $2.4 billion. Still, it looks like Google has taken a fairly hefty haircut on the $12.5 billion it paid for Motorola Mobility less than three years ago.
With only $660 million coming up front and the rest being paid in Lenovo stock and a promissory note, it appears at first glance that Google was desperate to be rid of a business that has been a dead weight on its profit. Motorola has become a much smaller business under Google, but still lost $248 million after adjustments in the third quarter.
Google's core business has been strong enough to counter this, as the company has maintained overall earnings-growth percentages in the double digits. The stock price has roughly doubled since Google's acquisition of Motorola was announced in August 2011.
Motorola was an odd fit among Google's other big bets, including YouTube and the recently announced deal for Nest Labs. The impetus to buy Motorola was to gain a big collection of wireless patents. Google thought these could help shield it from Apple's.
Source: WSJ
Source: WSJ
