If Google hadn't bought up the patents, how much could it have had to pay if it were sued using those patents?
How is it creative? I'm just adding up the numbers people have put out there. If you have a better source for how much each thing brought in or cost then post it and we can all see.
I don't think it was such a bad move. The $12.5B was a sunk cost, and the only real consideration should be what is the best move going forward. If Moto was losing money, and Google had decided that they weren't going to make the commitment required to make it a success, selling the hardware business for whatever they could get and keeping the IP makes perfect sense.
Everyone except Google seemed to have known that the patents weren't worth that much, so I guess that they would have been sued for pretty much zilch.
Unlikely. They could never have given gotten serious about hardware without pissing off major partners. It's been quoted in various places that the Motorola acquisition was mainly a patent buy. And it seems that Google is keeping most of those patents.
Can you explain why? For example, if you look at manufacturing they have in Europe (since labor costs are through the roof there), the entire process is automated with only one person touching the product. Clearly the costs are all in the tooling and process.
Also consider Dell. The only thing they did when they manufactured in US is to install the software (completely automated) and add RAM and hard drives. The motherboards, for example, were built in China, and installed into a Chinese made chassis in China. However, it still qualified as US made.
Well, starting with your $5,400,000,000 number, you left out that the purchase price included operating losses that Motorola had already incurred as Motorola... This was money spent by Motorola, not Google, that Google got to write off after the acquisition. $1,000,000,000 domestically and $700,000,000 internationally. So another $1.7bil lopped off.... down to $3.7billion- and there were additional breaks that were expected to continue on to the tune of $700million/yr until 2019 according to Forbes... so when you factor that in the losses (if any) get pretty small pretty quick, especially since they still hold the patents they deem useful to themselves.
I don't think Moto Mobile was a 'win' for Google by any stretch, but the exuberant schadenfreude most of the avid Google haters really isn't all that warranted.
To me I'm just a little sad that the inventor of the mobile phone and the only smartphone designed and made in the US is gone =(
That's not right. When Google wrote off the $1.7B in losses, they only gained the taxes that would have been paid on $1.7B. The write off is deducted from any profit before taxes. Google did not write off $1.7B from the taxes they had to pay. So Google did not gain $1.7B from the write off, more like about $450M. (based on a 25% tax rate)
That is, unless you meant that Google actually gained $1.7B from a tax write off of around $7B.
Brilliant. Best post.
Also, HP buying and sh*t canning Palm's WebOS. Copying Apple's model is way harder than it looks. And can't be done in a couple of years.
It requires something you cannot buy: True Vision and the ability to build a loyal inner core that can wear many hats, are tops in their industry at nearly all levels, while being willing to embrace leadership from someone with a lifetime of insight that has never been common. In fact, its exceedingly rare.
I always wonder that if Google hadn't been so greedy, (and it's very possible that Google may just run by a bunch of people with no business sense what so ever.) would Motorola (instead of Samsung) now be the largest cell phone maker or second behind Apple. All Google had to do was to exclusively license Android to Motorola. By shutting out the foreign cell phone makers of Android, the US with Apple and Motorola may have dominated. (Without Android, Samsung (iPhone rip off) Galaxy line wouldn't even be near as popular as they are now.) Not to mention that Microsoft might even be number 3. The US may have been in control of the technology in the cell phone market. But Google got greedy and gave Android away to all the cell phone makers that wanted to use it. And in the end, even with Android having the lion share of the market, Google still makes over 75% of their mobile revenue from Apple iOS. Google never wanted to compete in the cellphone market. They don't know how. They just wanted to make sure that as many cell phones as possible, have something with Google in it. Even if they have to lose money to accomplish it. And for this, they destroyed a US company whose history goes back to when tube radios was the cutting edge in technology. Google couldn't care less.
Stay in that insane Asylum.
It seems like you're overly concerned with the nationality of the lowest skilled worker in the entire manufacturing chain, wherein the lion's share of the overall process is created by your stated national preference.
Why shun all of the very highly skilled work done by Americans for the sake of the relatively simple work done by foreigners? I didn't know the shrink-wrap on the retail packaging is some kind of hole in our national pride... dood.
Monopoly money eh ? That explains why they spent $3 Billion on Nest.
Google trades at at PE of 30+, That is investor's money that they are playing monopoly with.
If their search engine / advertising combination really gets challenged in the near future, they are toast.
Time will tell.
The 2.9B cash were on Motorola books, they are not magically transferred to Google ones. If Google had kept the company, they would indeed lower the buy cost by increasing value, but what is left of it is transfered to the buyers. This is not a product or machine which is sold but a company that was kept as a 100% subsidiary with its own books, not integrated.
Google got almost nothing from the IP (2M from M$ is chump change), so that is 7B lost with a 25% tax writeoff on that to come, so more than 5B in final. And losing 1.5% of the Market cap is not a little thing, and that should be reflected in stock price.
On August 15, 2011, Google announced that it would acquire Motorola Mobility for $12.5 billion
On January 29, 2014, Google announced it would sell Motorola Mobility to the Chinese technology firm Lenovo for US$2.91 billion in a cash-and-stock deal
•When Google bought Motorola, the hardware maker had about $3 billion in cash on hand and nearly $1 billion in tax credits. So that brings the original deal’s effective price down to about $8.5 billion.
•Then, Google sold Motorola’s set-top box business to Arris for nearly $2.4 billion. That lowers the effective price to roughly $6.1 billion.
•Now, Google is selling Motorola Mobility — primarily the handset business, along with a few patents — for $2.9 billion. So we’re at about $3.2 billion
There is one thing to keep in mind, however: whether the value of the patents holds up in court. Last year, Microsoft claimed victory in its dispute with Motorola over the value of standard essential patents, when a judge determined that a reasonable licensing rate for some patents was a shade under $1.8 million a year. That’s well below the $4 billion a year that Motorola had sought.
so the whole saga of Motorola is about $3.2 billion loss in transaction values, plus Motorola did not yield single penny during google's tenure (via, New York Times)
Google share price grew 2.5x since the day of purchase
and even with such obvious write down of over 3 billion dollars share price fell mere 1% that too after market trading but not exactly after announcement
on the other hand Apple sold 80 million iOS devices in 1 quarter and made a profit of 13.1 billion on 38% margin!
Apple share price fell 12% straigt down
Smart?? Well, there is a problem with that. Google purchased Motorola for the patents, mostly...as well as a possible serious entry into the hardware Android market. After their disastrous (and childish) behavior during the Nortel Patents auction made them look foolish, Google was desperate to get some sort of patent portfolio that could arm them against Microsoft, Apple, et al... In their financial statements, Google valued the patents at $5.5 billion USD. However, when they went to trial with Microsoft, with said patents, hoping to get $4 billion USD in licensing fees from Microsoft, the judge ruled that the patent licensing was worth no more than $ 1.4 million!
So, clearly, Google misstepped and, frankly, did not do due diligence when they bought Motorola because the patent portfolio is turning out to be worth a pittance compared to what they paid for them.
I'd hardly call that smart. In fact, it's real, real DUMB!
Please update the AppleInsider app to function in landscape mode.
Please update the AppleInsider app to function in landscape mode.
You forgot to mention that Motorola Mobility was not profitable in the 1 year and 9 months that Google owned it and had an operating loss of about $1.8B. So were back up to about $5B.
Yeah, per lukefrench, this is probably a more sensible way to look at it than my analysis. The cash didn't lose value, so the depreciation was on other assets.
At any rate stock price is flat now, so seems to be little impact other than cash, which was a risk going in.
APPL dropping the other day after hours is silly, but happened.
Google made a move it had to make to protect Android. Motorola was losing money and threatened to start suing other Android manufacturers over patents. Google likely bought Motorola to stop that from happening. However, Google paid a premium for the patents. Google paid 12.5 billion for Motorola. Motorola had about 2 billion in the bank and about a billion worth of tax credits. That brought the price down to about 9.5 billion. Then Google sold the set top unit for about 2 billion. That brings the cost down to about 7.5 billion. Now Google is selling Motorola for about 2.9 billion bringing the cost down to 4.6 billion. This excludes whatever money Motorola lost since Google buying it.
About two thousand of the patents are going with Lenovo and presumably there is some kind of Lenovo gets to use the rest it needs agreement. So the question is was Google paying about 4.6 billion for Motorola's patents which to date have only brought in a few million dollars worth it? From the perspective of collecting royalties on the patents, clearly not. From the perspective of beating up on Microsoft or Apple, clearly not. From the perspective of stopping Motorola from attacking other Android users, maybe.