Lenovo acquisition of Motorola finally done

The completion of the acquisition of Motorola Mobility will allow Lenovo to provide North American partners with smartphones for the first time. But don't look for them to provide BlackBerry devices any time soon.


Yuanqing, chairman and CEO, Lenovo

With all regulatory hurdles finally completed, Lenovo has announced that its acquisition of Motorola Mobility from Google for $US 2.9 billion is complete. Lenovo will operate Motorola as a wholly-owned subsidiary. Motorola’s headquarters will remain in Chicago. Liu Jun, Lenovo executive vice president and president of Lenovo’s Mobile Business Group, becomes chairman of the Motorola Management Board. Rick Osterloh, who had been lead product developer with Motorola Mobility until he became president and chief operating officer of Motorola in April this year, will remain in those roles.

By conventional metrics, Lenovo got a great deal, in buying Motorola Mobility for almost ten BILLION dollars less than Google had paid for it only two years earlier. Motorola Mobility’s financial losses certainly drove down its value, although these have become less severe. Moreover, Lenovo is confident that Motorola Mobility can become strongly profitable under Lenovo’s direction.

“They can be a strong growth engine for Lenovo in the future,” said Yang Yuanqing, chairman and CEO, Lenovo, noting that Motorola has an attractive portfolio that had recently been enhanced by new wearable and accessory products.

“Their financial results are consistently improving, and now that they are is part of Lenovo the future is even brighter,” he added.

While the deal makes Lenovo the fourth largest smartphone vendor globally, according to IDC numbers, Yang said that this acquisition is critical to Lenovo’s strategy of selling a complete portfolio of offerings globally, as while Lenovo was already selling smartphones in other markets, it had not been doing so in North America.

“We are ready to move fully into the mobile era, and now with both x86 and Moto acquisitions complete, we are fully prepared to compete across the entire device portfolio from PC and other connectivity devices, to infrastructure and ecosystems and cloud services,” Yang said. “This is our strategy and road map. For our mobile business this year, we have already stated our goal, it’s to sell 100 million devices in this fiscal year, by the end of March … and I am certain we will achieve this target. But it is just a start. Leveraging Lenovo’s operational excellence and global reach, we are confident the Motorola business can become profitable in 4-6 quarters.”

Yang was asked a question in the acquisition press conference whether they would now be pursuing the acquisition of Canada’s Blackberry, which had been a rumored Lenovo acquisition target before the Motorola Mobility deal was made. He and the other Lenovo execs laughed it off, wondering if they had the money to do so after this acquisition and the recent one of IBM’s x86 server business. However, while Yang declined comment for the record, he likely expressed the company’s policy when he quipped that “we need to integrate this and make a lot more money first.”

Successful integration of Motorola Mobility is a major task, Yang acknowledged.

“There is important work ahead of us to integrate the company,” he said. “We have done this before in PCs and will do it again in smartphones.”

So what should Lenovo’s North American channel partners be expecting from this deal becoming final? One thing the company definitely has going for it is a strong channel program and a good reputation with partners. On its own, Motorola Mobility’s reputation with its partners was somewhat less exemplary. Neither the Lenovo press release, nor its executive press conference on the acquisition made any reference at all to the channel. That policy has, however, been stated multiple times since the acquisition by Lenovo executives speaking to channel issues. The position taken has been consistent that once the deal closed, Motorola smartphones would be quickly available for the channel to sell, and that they expect them to be profitable products for partners who work the mobility market.