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Motorola becomes Lenovo and the world number 3

by on31 October 2014

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Snapping at Samsung and Apple’s heels

In a few hours, Lenovo changed the rankings of a phone industry which is dominated by Apple, and Samsung.

However, now it has officially announced that it has completed the acquisition of Motorola Mobility from Google Lenovo becomes clear number three mobile phone manufacturer with 25.6 million sold devices, according to the latest IDG report. Lenovo managed to sell a healthy 16.9 million phones while Motorola sold quite good 8.7 million phones. Most of Motorola phones were Moto G and inexpensive Moto E but making the latest Nexus 6 for Google will definitely boost Lenovo numbers in the fourth quarter.

Motorola is a wholly owned subsidiary with its headquarters in Chicago while the Motorola's 3,500 employees will join the Lenovo. Some 2,800 people who design, engineer, sell and support Motorola’s devices are US based and there is no indication that this is going to change anytime soon. The new logo claims that "Motorola is a Lenovo company" and the head of US Motorola will report to the bosses in Lenovo China.

Lenovo is getting some cool products such as Moto E, Moto G, Moto X and Droid phones as well as quite popular Moto 360 watch. Lenovo expects that it can sell as much as 100 million mobile phone and tablets this year, and the numbers are coming combined from both companies' sales.

There is no surprise that Google remains the owner of most of the patents while Motorola a Lenovo company will receive a license to this rich portfolio of patents and other intellectual property.

Motorola will retain over 2,000 patent assets and a large number of patent cross-license agreements, as well as the Motorola Mobility brand and trademark portfolio.
Lenovo paid approximately US$2.91 billion, including approximately US$660 million in cash and 519,107,215 newly issued ordinary shares of Lenovo stock with an aggregate value of US$750 million, representing about 4.7 percent of Lenovo’s shares outstanding, which were transferred to Google.

The remaining US$1.5 billion will be paid to Google by Lenovo in the form of a three-year IOU. A separate cash compensation of approximately US$228 million was paid by Lenovo to Google primarily for the cash and working capital held by Motorola.

Google paid $12.5 billion for Motorola Mobility back in 2011 and considering that it sold the company for $2.91 billion, one can see this as a huge loss. It was all about the patent portfolio that Google was after patents. The company had 17,000 patents, with 7,500 more patents pending and this put Apple in a bad position in a potential lawsuit against Google over the android patent infringements of iOS.
Motorola managed to sell its cable modem and set top box group to Arris group in December 2012 for $2.35 billion making some of the 12.5 billion USD back.

Lenovo has many great brands and designs including legendary ThinkPad and the company likes to experiment with Ashton Kutcher and weird shaped tablets. Motorola is strong brand in phones and it will definitely increase Lenovo presence in the US, one of the main Motorola's markets.

We will see if Lenovo can put Apple and Samsung in jeopardy becoming the number 2 or even number 1 phone manufacturer when it comes to the volume.

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