Google sheds Motorola in $US2.91b deal

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17 Feb 2019

Google has agreed to sell Motorola to Chinese technology giant Lenovo for $2.

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91 billion, after a lacklustre 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 finalised in 2012.

It also provides Lenovo footholds in smartphone and tablet markets, 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 a week after Lenovo said it would 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 per cent to $HK10.06 ($A1.47) on Thursday as investors were spooked about Motorola’s profitability.

Motorola failed to gain traction in a rapidly evolving smartphone market now dominated by South Korea’s Samsung and US-based Apple.

Lenovo chairman and chief executive Yang Yuanqing said the acquisition “will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space.”

The Chinese company was the fifth-largest smartphone maker in the fourth quarter, with a 4.5 per cent market share, barely behind fellow Chinese maker Huawei and South Korea’s LG, according to a report by research firm IDC.

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