After Big Bet, Google Is to Sell Motorola Unit

Google will sell Motorola Mobility to the Chinese company Lenovo for $2.91 billion, less than two years after paying $12.5 billion to acquire it.

Motorola was Google’s biggest acquisition by far. But Motorola has continued to bleed money, troubling shareholders and stock analysts, and its new flagship phone, the Moto X, did not sell as well as expected. The deal is not a total financial loss for the extremely wealthy Google. 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. Still, it is a sign of the fits and starts the company is experiencing as it navigates business in the mobile age, which has upended technology companies of all types. Selling Motorola is an acknowledgment that Google is better off focusing on its core competencies -- making software and selling ads -- particularly as the profit margins for phones are shrinking over all. Google will retain 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 certain ones. Analysts have described the patents as the most valuable part of the acquisition, worth several billion dollars alone because they are firepower for Google to defend its Android mobile operating system. Though the patents have not proved to be very helpful to Google in patent litigation, they have helped in cross-licensing agreements with other companies, including one Google and Samsung announced on Jan 27. Lenovo, already the world’s biggest PC company, is buying itself a toehold in the fast-growing smartphone business during a worldwide slowdown in PC sales, and overnight brand recognition in the West.