Wow. Paying 63% above the stock price seems reasonable for a rising star. But for a company that in some ways is a has-been?
Apart from the purchase price, this looks like a good move.
Yeah, yeah, Google gets some patents too. But if that was all that Google wanted, they could have got the patents much cheaper than $12,500,000,000. |
That does indeed sound like a big payment... how do you think Google could've gotten the patents cheaper Roger? |
Well Philipp, the first question is why Google paid 63% above the open-market stock price. I'm sure Google has a good reason, but it's not clear what this reason could be. Motorola shareholders must be very happy indeed.
Bear in mind that Motorola Mobility has had some very troubled years since it peaked with the RAZR phone a decade ago. Motorola's latest financials show an operating loss of $85 million in the second quarter. Wouldn't Motorola's board and shareholders have been thrilled to license the patents for, say, a thousand million dollars?
Google doesn't need Motorola for its Android handsets. After all, Motorola is making Android handsets anyway. Google wants Motorola's patents of course, not for the patented technology itself but as a way to keep the patent trolls at bay. But Motorola has something else that Google wants, and I think that may be what makes this deal desirable to Google.
In recent months, Motorola Mobility has been doing very well with their "Home Segment" products and services. Here are the four items that are highlighted in the latest quarterly report:
1. Motorola Televation, a broadband video device enabling consumers to watch TV on a connected IP device anywhere around the home
2. The Medios platform, which merges video with social networking, games and the web, turning broadcast TV into something more interactive
3. Developed an in-home video gateway platform for Time Warner Cable
4. Selected by ESPN to transition all their programming to MPEG-4 HD format.
Interesting stuff. I think that's what tipped the scales for Google. They see big growth in [advertising for] home entertainment products and services.
Motorola Mobility Second Quarter Financials:
http://www.androidcentral.com/motorola-mobility-announces-second-quarter-financials-android-leads-way-again |
WSJ has modified the title; not including the price $12.5billion any more.
<<...
Google Inc. agreed to acquire Motorola Mobility Holdings Inc. for about $12.5 billion in cash on Monday, allowing the creator of the fast-growing Android mobile operating system to build its own smartphones and tablets and providing patents to defend against a rash of lawsuits.
...>> |
Google's net income for 2010 was $8.5 billion, so effectively Google is channelling all of its profits for 18 months into this deal. That's how big it is. |
