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Google selling Motorola phone business to Lenovo for $2.9B

The Motorolplant located 600 N. Highway 45 Libertyville. | Thomas Delany Jr.~ Sun-Times Media

The Motorola plant located at 600 N. Highway 45 in Libertyville. | Thomas Delany Jr.~ Sun-Times Media

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Updated: January 30, 2014 5:38PM

Two years after hopes of a turnaround under Google Inc., smartphone-maker Motorola Mobility is being sold to China-based Lenovo in what amounts to a fire sale.

The $3 billion price tag is a huge discount from the $12 million Google spent to snap up the Motorola unit in Libertyville, reflecting the fading fortunes of the once-high-flying cellphone-maker known for the Razr and Moto X.

The deal announced Wednesday will rid Google Inc. of a financial headache that has plagued the Internet company since buying Motorola Mobility for $12.4 billion in 2012. Motorola has lost nearly $2 billion since Google took over, while trimming its workforce from 20,000 to 3,800.

Motorola is scheduled to move 2,000 workers into the Merchandise Mart by the end of March. A Motorola spokesman on Wednesday said that move is still on. He also confirmed the Motorola brand will remain.

While Google is reversing courses, China’s Lenovo Group Ltd. is gearing up for a major expansion. Already the world’s largest maker of personal computers, Lenovo now appears determined to become a bigger player in smartphones as more people rely on them instead of laptop and desktop computers to go online.

It also marks Lenovo’s second high-profile deal this month. The company announced plans last week to buy a major piece of IBM Corp.’s computer server business for $2.3 billion.

Google is retaining most of Motorola’s portfolio of mobile patents, providing the company with legal protection for its widely used Android software for smartphones and tablet computers. Gaining control of Motorola’s patents was the main reason Google CEO Larry Page decided to pay so much for Motorola Mobility at a time the smartphone maker was already losing money and market share.

Most analysts thought Page had paid too much money for Motorola and questioned why Google wanted to own a smartphone maker at the risk of alienating other mobile device makers that rely on Android.

Selling Motorola’s smartphone operations will “enable Google to devote our energy to driving innovation across the Android ecosystem,” Page said in a statement.

Lenovo is picking up about 2,000 Motorola patents in addition to the phone manufacturing operations.

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