Google Readies Motorola Unit Sell-Off

Google is reportedly preparing to sell a unit belonging to Motorola Mobility, which it fully acquired in May for $12.5 billion (£7.9bn).

Google apparently wants to get out of the set-top box business owned by Motorola Mobility and has hired Barclays to help sell the Home Business division of Motorola, according to a report from Bloomberg News.

Division Sell-Off

“Motorola Mobility’s Home Business unit might fetch about $2 billion (£1.3bn) and the sale is in the very early stages,” according to the Bloomberg report. “Motorola tried to sell the unit in 2009 for more than $4 billion (£2.5bn), people close to the situation said at the time.”

News of the possible sale of the Motorola division comes just a few weeks after Google announced some other big changes at its Motorola unit – the layoff of about 4,000 workers there – which is about 20 percent of the workforce. The job cuts will also include the closing of 30 of Motorola’s 90 facilities around the world. Two-thirds of the job cuts are set to occur outside the United States. Those moves come as Google works to simplify Motorola’s mobile product portfolio – shifting the emphasis from feature phones to more innovative and profitable devices, according to Google.

The cuts are being made to try to reverse financial losses in the Motorola unit, which has lost money in 14 of the last 16 quarters.

As part of the Motorola shake-up, Google is also cutting about 40 percent of the vice presidents in the Motorola unit.

In July, Google gave its first revenue report since officially acquiring Motorola Mobility, posting second-quarter revenue of $12.21 billion (£7.7bn), which is a 35 percent increase from $9.03 billion (£5.7bn) in the second quarter of 2011. The company released its fiscal 2012 second-quarter results July 19. The quarter ended 30 June.

The $12.21 billion second-quarter revenue was up 15 percent from the first quarter of the year, when Google reported $10.65 billion (£6.7bn) in revenue, according to the company. GAAP (generally accepted accounting principles) net income reported in the second quarter was $2.79 billion (£1.76bn), compared with $2.51 billion (£1.6bn) in the second quarter of 2011.

Patent Portfolio

Much of the value in the purchase of Motorola was driven by Google’s desire to bolster its own patent portfolio by bringing in Motorola’s estimated $5.5 billion (£3.5bn) worth of patent holdings. Those patents are seen by Google as assisting the company as it expands its reach into mobile hardware and services around the world.

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies,” Google CEO Larry Page explained in a corporate blog post.

Google also escalated its battle with Apple last week when its Motorola unit sued Apple for patent infringement, claiming that Apple has violated patents related to email notifications, video players and location reminders as well as patents related to Apple’s Siri voice-recognition program. The patent claims, which are in Motorola’s second lawsuit against Apple recently, involve designs in Apple iPads, iPhones, and various Mac computers, including the MacBook Air and MacBook Pro.

Google bought the Motorola Mobility unit as it continues to build up its power and holdings in the battle for a bigger chunk of the mobile marketplace, which continues to grow annually.

The new lawsuit is an apparent extension of what has been playing out as an escalating market war between Apple and Google over the last six months. Apple previously announced that it is removing Google’s YouTube and Google Maps apps from its devices. Meanwhile, Google has been bringing out Siri-like voice activation services for its Android mobile operating system, which is gaining developers and market share and becoming a keen competitor against Apple and iOS. Google is even bringing out a version of its voice services for iPhones and iPads to take on Apple in its own backyard.

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Originally published on eWeek.