Most investors viewed Motorola as an unnecessary drain on Google's profit, a perspective that was reflected by Wall Street's reaction to the sale. Google's stock gained $28.08, or 2.5 percent, to $1,135 in extended trading.
A cellphone pioneer, Motorola Mobility had its last big hit with the Razr flip phone, which came out in 2004. Its product line became outmoded after Apple Inc. released the iPhone in 2007, unleashing a new era of touch-screen phones. Motorola hasn't been able to catch up yet, even as last summer's Moto X received positive reviews.
Motorola's losses are likely to dampen Google's earnings at least for the first half of this year. That's because it's expected to take six to nine months before the proposed sale gets the necessary approvals from regulators.
Buying Motorola will enable Lenovo to join Apple Inc. as the only major technology companies with global product lines in PCs, smartphones and tablets, putting Lenovo in a better position to become a one-stop shop for companies to buy all their devices from the same vendor, said Forrester Research analyst Frank Gillett.
"This makes Lenovo a company to watch," Gillett said in an email. "The personal device manufacturer business is consolidating - and manufacturers must compete in all three device markets, plus emerging wearable categories, or get left out of the next market shift."
Lenovo plans to keep both smartphone brands, selling under Motorola's name in developed markets and under its own in developing countries where it already is established, chief financial officer Wong Waiming told reporters.
Lenovo's annual smartphone revenues are about $4 billion and, with the addition of Motorola, the company hopes to increase that quickly to $10 billion, Wong said in a conference call.
The Chinese company is paying a portion of the purchase price to Google with $750 million in Lenovo shares. Wong said that was part of a "strategic relationship the two groups want to establish." He said details still are being discussed.
Features:
Dual SIM
3.9 inches IPS Display
Android 4.1 Jelly Bean OS
1GHz Dual Core processor, 512 MB RAM
512 MB of internal Memory, expandable
5.0 MP rear camera, front camera
3G, Wi-Fi, GPS, USB, GPRS connectivity
1400 mAh Battery
Price: Rs. 5480 (as on flipkart)
