The marriage between handset maker Motorola Mobility and tech giant Google (GOOG) is over. On Wednesday, Google announced plans to sell the maker of the Moto X smartphone to Lenovo Group (LNVGY) for $2.9 billion. The news sent GOOG stock up more than 3% in Thursday morning trading.
GOOG stock climbed after the Internet search engine’s CEO Larry Page said, in a post on Google’s blog, 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.” Page conceded that “the smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices.”
Google acquired Motorola in 2012 for $12.5 billion. Along with its manufacturing assets, Motorola brought a vast portfolio of mobile technology patents to Google. The Motorola merger remains Google’s largest acquisition to date. However, intensifying competition in the smartphone market and lackluster sales of leading Motorola smartphones, including the Moto X, turned Motorola into a drag on Google’s profits, USA TODAY notes.
Google will retain most of the patents it obtained when it acquired Motorola and has agreed to a patent licensing deal with Lenovo. The sale of Motorola moves Google out of the handset manufacturing business.
While Google won’t be making its own smartphones, it has recently expanded its device manufacturing reach. Earlier this month, Google agreed to buy smart thermostat-maker Nest for $3.2 billion.
Late last year, Google purchased Boston Dynamics, a developer of robots for the Pentagon.
GOOG stock has risen more than 45% over the past 12 months. GOOG stock has traded above $1,100 a share since December.