ChinaDaily, Reuters, and The New York Times are all independently claiming that Lenovo is gearing up to take Motorola off of Google's hands. Reports peg the sale at $3 billion. Google originally paid $12.5 billion for Motorola and sold off the set-top box division for $2.35 billion, so if the reports are true, Google would be taking a hit of about $7 billion.
Motorola has been losing money, but a turnaround seemed to be in full swing. Google had sold off the parts of Motorola it didn't want, including the aforementioned set-top box division and a few factories, while cutting a significant amount of the staff. Google installed its own executives at the top of the company, and it hired the former head of DARPA to run the R&D department. Google seemed to understand the task ahead of it, repeatedly stating that turning around Motorola would involve clearing an "18-month pipeline" of work-in-progress devices—Google only took over Motorola in May 2012.
Recent products, like the Moto X and Moto G, were well-received and even innovative, and the CEO of Motorola recently talked about building a $50 smartphone. If Google does sell Motorola for $3 billion, it will have taken a struggling company, done all the cleanup work, set it on a good trajectory, and still lost a ton of money.
Google earnings will be released at 4:30pm ET; hopefully we'll get more information then.
Update: Google has officially confirmed the rumors with a blog post and press release. The documents say the sale price is "approximately US $2.91 billion (subject to certain adjustments)."
Google justifies the sale by saying:
The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo—which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere. As a side note, this does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.
Google will retain Motorola's patents, which helps that $7 billion dollar difference sting a little less. The deal is still pending approval in the US and China, so until that happens, Google says it's "business as usual."
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