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Google Sells Motorola at a Major Loss, But Keeps What It Really Wanted All Along

For Google and Motorola Mobility, it's a case of good news and bad news. Less than two years after acquiring the smartphone maker, Google has announced an agreement to sell the company to China-based PC maker Lenovo Group Ltd. for $2.91 billion.

First, the bad news. Google agreed to buy Motorola Mobility in August 2011 for $12.5 billion in cash, or $40 per share at the time. It was Google's largest acquisition. Google selling the company now for less than $3 billion means the company is taking a significant loss.

Financially, things weren't healthy at Motorola Mobility. Despite three rounds of layoffs that eliminated around 6,000 workers, the division was reportedly on pace to bleed $1 billion a year. So, no big wonder why Google wanted to offload the division to someone who can perhaps scale the business.

Related: Despite Long, Litigious Past, Samsung and Google Announce 10 Year Cross-Licensing Agreement

Now, the good news. As part of the deal, Google will retain the vast majority of Motorola’s patents, which the company "will continue to use to defend the entire Android ecosystem," Google co-founder Larry Page wrote in a blog post.

Not only was Google's acquisition of Motorola Mobility a play to supercharge the Android ecosystem, it was a way for Google to take control over Motorola's portfolio of 17,000 patents and another 7,000 pending patents. At the time, Android was facing a number of "anti-competitive patent attacks" from companies like Microsoft and Apple.

Last week, Lenovo agreed to purchase IBM’s server business for about $2.3 billion.

Google's deal with Lenovo has yet to be approved in the U.S. or China, and that process will likely take some time, as Page noted in his post.

Related: IBM to Sell Server Business to China-Based Lenovo for $2.3 Billion

Jason Fell is the managing editor of Entrepreneur.com.

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