FORTUNE -- Google reported strong fourth-quarter earnings Thursday: The company earned $16.86 billion in revenue for the fourth quarter, a 17% jump over the same period in 2012. Google's GAAP earnings per share was $9.90, up over $8.62 in the year prior. The company's stock traded up more than 4% after hours.
But analysts on the earnings call were more concerned with the company's M&A activity. Google's (GOOG) sale of Motorola Mobility, announced Wednesday, came as a shock to market observers. Part of it was sticker shock: Google only bought the handset maker less than three years ago for $12.5 billion; Lenovo would pay a mere $2.91 billion. But more so than the loss of value, the deal sent a confusing message about Google's commitment to hardware: Was the company retreating?
In its fourth-quarter earnings call Thursday, Google CFO Patrick Pichette and chief business officer Nikesh Arora artfully dodged questions about the decision to sell Motorola. They flat-out ignored a question as to whether owning a handset maker like Motorola made it difficult for Google to deal with other handset makers using Google's Android operating system. (When the deal was announced, many wondered if Google would play favorites with its in-house handset brand.) "We have always had a clear objective to support all of our partners, and after this transaction, it's very clear we will continue to be this impartial supporter of this ecosystem," Arora said.
Aside from a set of valuable patents obtained through acquiring Motorola (which are, for the most part, not included in the sale to Lenovo), the division's performance has been a dark spot on Google's otherwise stellar revenue growth. The unit lost $384 million this quarter. Arora called the sale a "win-win" for all parties involved, sticking to the party line that Motorola has strengthened the Android ecosystem.
More importantly, the executives stressed Google's commitment to hardware, even as it sells hardware assets in the most prominent hardware category, phones. Pichette made a distinction between smartphones and Google's other hardware projects. Google is focusing on hardware "in areas that are enterprising promising new frontiers," he said. In other words, not boring old handsets.
Earlier this month, Google paid $3.2 billion to acquire Nest, a smart thermostat company which blends hardware and software. It bought robot dog maker Boston Dynamics late last month. And for the past few years, Google has invested in other tangible technology like Google Glass and self-driving cars.
Google started out as a simple search engine, but has made headlines in the last year for its futuristic "moonshots," or mad scientist-inspired innovations, many of which have a hardware component. A department called Google X, led by the scientist Astro Teller, has created Project Loon, a set of high-altitude balloons which provide Wi-Fi. Likewise Google has experimented with driverless cars, smart contact lenses, and appliances which are connected to the Internet. Calico is a Google project which aims to solve problems around aging (using wearable technology?).
The company's sale of Motorola cuts off a money-losing operation in a category, smartphones, that is becoming mature and commoditized. It doesn't signal a move away from hardware for Google -- if anything, it frees up cash for more. We know one thing -- whatever new hardware project Google reveals next, it will be out there.
In an interview with Fortune, Yuanqing Yang says that his company seeks to replicate its ThinkPad success with Motorola.
FORTUNE -- Fresh from signing a $2.91 billion deal with Larry Page to acquire Google's Motorola unit, Lenovo CEO Yuanqing Yang spoke to Motorola employees for 45 minutes at the latter company's headquarters outside of Chicago on Thursday. Immediately after that meeting, Yang discussed the deal and Lenovo's plans to compete in the MOREMiguel Helft, senior writer - Jan 30, 2014 4:01 PM ET
Google CEO Larry Page admitted that it didn't make sense for Google to remain in the handset business.
FORTUNE -- After trying and failing to compete effectively in the handset business, Google is selling its Motorola business unit to Lenovo, the world's largest and fastest-growing PC maker, for $2.91 billion in cash and stock.
MORE: Can Lenovo do it?
After the deal, Google (GOOG) will retain the vast majority of patents it acquired with MOREMiguel Helft, senior writer - Jan 29, 2014 5:46 PM ET
Here's a hint: Apple and Samsung should be nervous.
FORTUNE -- In this game of chicken, it looks like IBM blinked.
The Armonk, N.Y.-based technology company (IBM) has wanted to unload its low-end, x86 server business for some time. Early last year, it conducted serious negotiations with the most likely buyer, Lenovo, the Beijing-based company that purchased its personal computer business in 2005. News of an impending deal, presumably leaked by IBM, MOREMiguel Helft, senior writer - Jan 24, 2014 11:37 AM ET
Chinese computer maker introduces Yoga, its Android tablets that break the mold.
FORTUNE -- Who says tablets have to be flat? There was no decree from Steve Jobs, no edict from Amazon (AMZN), Google (GOOG), or Samsung. Oh, and Ashton Kutcher thinks it's unnecessary (more on that later). Yet the tablet market today is a sea of often indistinguishable flat slates in which hardware innovation is measured in thinness, screen resolution, MOREMiguel Helft, senior writer - Oct 31, 2013 11:00 AM ET
A graphical look at the state of play on the eve of another Apple special event.
FORTUNE -- Anticipating some iPad news out of Apple (AAPL) Tuesday, I'm trying to get a picture of the state of play in the global tablet market from published graphs and charts. Most of the attached are based on IDC data. If you spot any that are fresher -- or better -- please send them MOREPhilip Elmer-DeWitt - Oct 21, 2013 2:25 PM ET
Even as Lenovo was becoming the top seller of PCs, its sales of mobile devices were surpassing its sales of computers.
FORTUNE -- In yet another data point highlighting the worldwide shift from PCs to tablets and smartphones, Lenovo (LNVGY) says its sales of mobile devices have surpassed its sales of PCs.
Sales of "smart devices" (including phones, tablets, and PCs) rose by 41% in over the past year, Lenovo said in MOREDan Mitchell, contributor - Aug 15, 2013 1:13 PM ET
The Chinese tech company is one of the biggest companies in the world.
FORTUNE -- As widely expected, China's Lenovo this week emerged as the world's top purveyor of personal computers, according to new reports from two research firms. Both Gartner and IDC say Lenovo's market share in the second quarter of 2013 hit 16.7%. Lenovo unseats longtime No. 1, Hewlett Packard, whose share fell to 16.3%, Gartner says.
Lenovo had another MOREStephanie N. Mehta, Deputy Managing Editor - Jul 11, 2013 7:48 AM ET
Sony's new Sony Vaio Pro laptops are lighter than MacBook Airs and (almost) just as thin.
FORTUNE -- Clasp Sony's 13-inch VAIO Pro in one hand, and you'll be impressed by how light it feels. It's even lighter than the most svelte 11-inch MacBook Air.
The Air is obviously far from heavy, but thanks to carbon fiber used throughout the Vaio Pro's body, Sony (SNE) trimmed the weight to 1.92 lbs. for the 11-inch MOREJP Mangalindan, Writer - Jul 9, 2013 9:40 AM ET
The story behind the computer world's most enduring design -- and that quirky little red dot in the middle of the ThinkPad keyboard.
FORTUNE -- A few rows of airline seats are bolted to the floor in a room with sweeping views of the North Carolina countryside at Lenovo's U.S. headquarters in Morrisville. It's an incongruous sight, until you realize that if you are going to make one of the most MOREMiguel Helft, senior writer - Jun 10, 2013 5:00 AM ET
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