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Google's Motorola Adventure: Stinging Defeat, Or Semi-Victory?
Nerval's Lobster writes "Google had previously sold Motorola's Home division for $2.4 billion. Combine that with yesterday's $2.91 billion sale of Motorola's remaining assets, subtract the $12.5 billion acquisition price for the company back in 2011, and Google's little smartphone adventure cost it roughly $7.1 billion even before you start throwing in expenses related to actual production, marketing, and personnel. That's a hefty chunk of change, but some analysts think the deal was ultimately a good one because it allowed Google to pick up patents, engineering talent, and insight into the mobile-device marketplace. It's debatable, however, whether those patents ultimately helped Android in the still-raging smartphone wars, and Google was slow to promote Motorola smartphones out of fear of irritating other Android manufacturers. At least Google can console itself with the thought that so many of its other acquisitions—including YouTube and DoubleClick—resulted in massive profits; but you can't hit a home run every time you step up to bat."
I don't really understand why people analyze this kind of shit to death. Does it really matter?
"I meant to do that!"
- $3.2B Moto's 2011 cash
- $2.4B Moto's 2011 deferred tax assets
- $2.35B Moto's Set-top-box business sold in 2012
- $75M Moto's factories business sold in 2013
- $2.91B Moto's Mobility business sold in 2014
So the "patents, engineering talent, and insight into the mobile-device marketplace" cost $1.56B, not $7.1B
At least according to BGR
-3B Cash ,and -1B Tax breaks. That brings it down to 3.1B.
"To those who are overly cautious, everything is impossible. "
I've seen pretty convincing analysis today showing that, when you take the tax benefits of the deal and Motorola's cash position into account, Google is about $1bn to the good out of the deal, and it's retaining the patents. So it has bought a loss-making company for $12bn, broken it up into bits it can sell for around $5bn, got $3bn cash out of it, and about $6bn off its tax bill over the next six years, while gaining a large and important patent portfolio. Doesn't look look like a loss to me.
Slashdot - News for Nerds, Stuff that Matters, in ISO-8859-1 Has just realised that beta makes this signature redundant
Actually there's a whole bunch more accounting that was done, and you can reasonably argue that it basically cost Google about $1B to get access to the patents:
At $12.5B, Motorola is Google’s largest acquisition to date. Google paid $40 /
share in cash, but received ~$11 / share in cash and $8 / share in deferred tax
assets. Thus the value ascribed to operations + patents was about $21 / share, or
$6.3B, reflecting a multiple of ~0.5x sales and 12x EBITDA. Now adjusting this
further for the $2.35B total consideration Google is expected to receive for the
Motorola Home business, we get a purchase price of just under $4B for Motorola's
handset business and patent portfolio (17K patents and 7.5K patent applications).
http://www.zdnet.com/googles-motorola-purchase-was-it-worth-it-7000009356/
https://news.ycombinator.com/item?id=7147251 (via)
1. Patents that will later earn (or save) more money than they lost
2. Talent (what do self driving cars and autonomous robots have in common: the need to communicate wirelessly)
3. An indefinite multi-billion tax writeoff that ensures that Google joins GE and other large corporations that pay no taxes
Asset stripped and dumped. Thanks, Google.
Never email donotemail@WeAreSpammers.com
Bad deal in that case.
How about calling it a pointless waste. Google had an idea. Either they changed their mind or they weren't able to execute the idea.
Either way, they lost $7,000,000,000.00 on the "deal'. It was a pointless waste. And now a Chinese company owns what was an important American technology company/division.
Speaking of pointless wastes... I am again forced to use beta.slashdot.org Yea, it still blows goats.
The value of the patents is the question. The definition of Fair Market Value is the price determined between a willing buyer and a willing seller. The proposition that all Google was ever really wanted from Moto was its IP seems self evident. Google was willing to buy the Home and Phone hardware operations to get the IP. Google was under no constraint or duress. Like other major players in the phone space it had a need to own enough IP not to be a target for constant demands. The financial press suggested for the outset that Google intended to sell both hardware operations. It delayed the sale of phone production to gain additional intangible value, IP. The price it paid for the IP after netting out the dollars received for the unwanted assets is the very definition of FMV.
Was more like ~1.5B (or less) and at that price it wasn't a bad deal at all to pick up the patents and a few choice pieces of the company.
Good job linking to the Slashdot subsite no one reads.
As far as I remember it was barely worth the massive bandwidth bills. But last time I heard about this subject was before the stupid video ads.
Google was not slow to market Moto X. Knowing that they will sell the business they did not invest much into it.
They never wanted to become a big phone manufactor (that would have scared away others), they wanted the patents to protect the android eco-system...
Google bought Motorola's IP and sold off the only thing left of value (the name)
this is so hard to understand halp
I thought it was only teh Micro$$$oftss that had to buy companies and strip away their IP because of lack of innovation....
come on Fandroids, where are your cries against this kind of IP dickering today?
Disgusting. LOLzzz!!!! YOU AIN'T GOT NOTHING!!!!! Just a bunch of cheap dime store hoods with neckbeards.
People forget Google is keeping the patents previously held by motorola in this deal. The patents would be used solely to defend against litigious trolls like Microsoft and Apple. Microsoft -- having failed deleteriously to make any headway in mobile phones -- being relegated to siphoning off revenue from Google, and Apple having run out of gas to keep innovating after blowing their wad on iDevices in the Jobs era. Without a strong patent portfolio Google would expect to find itself bled quarterly in tandem with microsofts earnings and losses reports like so many other TomToms and Samsungs. And without said patent portfolio Apple would surely enjoy bleeding Google dry in court for centuries given their deep pockets.
Motorolas mobile phone technology was easily outclassed by HTC and made further irrelevant by the fact that Google has vehemently resisted becoming a hardware company. This is the equivalent of sucking the juice out of a Capri Sun, and finding someone willing to buy the packaging. Any patents or prior claims inherited by the Motorola purchase, one would conjecture with much chagrin, would be employed to defend against Microsoft hardware patent chicanery in court. As of late Redmond has taken a keen liking to sticking their dick in googles hardware manufacturers as a means of surviving a market that doesnt seem to give two shits about them beyond XBox.
Good people go to bed earlier.
The summary tries to paint the picture that Google's acquisition and sale of Motorola was somehow not quite what Google had hoped for. When Google announced that they would buy Motorola Mobility on Aug 15 2011 Google closed at: $557.23. Today Google is at $1140. Between yesterday and today Google jumped > 3%. Obviously Google's stock price is influenced by many factors but the acquisition of Motorola has not seemed to deter the massive gains Google has experienced over the past 2 or 3 years.
$12 Billion sitting in a bank account really doesn't do anything for Google, and it makes investors upset. So they bought talent and patents, took what they wanted from Motorola and are now selling the left over parts. They are not taking a loss. This isn't MySpace being bought for $500 million and being sold for $35 million, it is idiotic to suggest this was a stinging defeat. It was a shrewd business decision.
Google got the patents they wanted. Put the rest of them into the hands of a company who will play ball with google in the future.
There's more to profit than MONEY RIGHT THE FUCK NOW... This move is going to make google money far into the future.
Both for themselves alone and as a partner with their good buddies over at lenovo.
But 'investors' don't see that. So you're right. Totally right. Google is a terrible stupid evil company and you should sell off your google stock RIGHT NOW.
(and kick yourself in another year or 5 when the google money just keeps rolling in for everyone else)
I got up early for Motorola's Black Friday sale to get a developer's edition Moto X. They launched three hours after their advertised start time. Once their systems came online, I got an order in in less than three minutes. I got an order confirmation and hours later Motorola staff was posting on social media, urging people to buy the model I got. The next day, they send me a cancellation notice saying they have no stock and they're not going to honor my order, despite offer and acceptance.
Google sucks at anything that requires anything that resembles customers service. Humans don't map/reduce well.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Google's market cap is $380 Billion. Even if they had lost the $12 Billion entirely (and obviously, they didn't), this would be chump change to them.
I find it more interesting that the sale price was so low for Motorola and Nokia.
Apple have a nominal market cap of $450 Billion, at least half of that must be because of their iPhone profits. How can Apple's phone division be 100 times as valuable as Motorola?
The Moto X was actually an outstanding phone. I dumped my gs3 for one. I think the real end-game here was getting Samsung back in line. Motorola phones were selling enough units to raise alarms at Samsung. It's not like Samsung was in any danger of losing their stranglehold on android phone sales in the short term, but long-term with Google's backing it was only a matter of time until Motorola started taking significant chunks. End result: Samsung has supposedly agreed to dump it's custom UIs and custom applications and fully embrace the Play store and the Google ecosystem. It seems unlikely the timing is just a coincidence.
http://gigaom.com/2014/01/29/report-samsung-to-hold-the-touchwiz-on-future-android-devices/
And you CERTAINLY can't hit a home run when you don't even swing the bat.
One of the first things they did when they took over was start abandoning Android platforms.....
One of the Best phones around was the Photon, Motorola kept promising an upgrade to later Android revs, and 'supposedly' had one in the release queue, but once they got bought, it got delayed, and delayed, then ultimately cancelled...leaving Sprint customer with a phone that wasn't being updated, and left behind (and had many usability problems that were fixed in later Android versions). Their solution was to give you a $100 certificate towards ANOTHER MOTOROLA PHONE....Give me a break....
Way to take care of your customers, Google...
Bough 6 Samsung phones within 2 months after that....
How is it that Google posts a $7Billion+ loss and the stock rises $30+ and Apple posts record profit yet the stock drops $50? That is just absurd!!
Not surprising of course but zero mention of the employees of Motorola Mobility and Motorola Home who got whipsawed back and forth these last few years. I remember celebrating back when Google bought "us" a few years back...only to quickly see that they had zero interest in anything but the patents. So happy to have gotten out early.
It's all about Samsung. Samsung desperately needs a bailout, with its floundering smartphone offerings, failing consumer appliance division, and failing consumer TV division, and failing semiconductor division. Selling off Motorola frees up Google's time to focus on taking over a much bigger fish in the consumer market, while Lenovo, which is decidedly happy with the business niche it has carved out for itself, will similarly be happy with turning Motorola back into a business products company like it should be.
I think this new alignment is better for everyone, and will better position Samsung and Google to defend itself against Apple's never ending barrage of lawsuits.
I doubt Microsoft will every be able to justify the 8 billion dollar price tag it paid for Skype.
I think Google should go out to and make another wise investment. I would love to so MS buy something like Pinterest for 15 billion.
vi +
If Google didn't buy them, someone else would now have those patents.
they valued the patents at $5.5 billion
One would be hard pressed to agree with that value given that EVERY time Google has tried to use them in court, Google lost...
It's nice to have patents for defensive purposes but it's not clear these are doing that much for them. People seem to be treating patents like piles of coal, ignoring that one persons pile of patents is quite different than another... it doesn't matter if you have 10,000 patents if your opponent has a key one you cannot work around.
As others have said, Google (and everyone) would have been far better off if they had spent $1b lobbying against software patents altogether.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
How hard would it be for Google to provide Android updates to smartphones themselves, rather through the carriers?
If their fear is Samsung forking Android, why not just provide alternate Android OTA updates? 90% of the OEM phones are just ARM/Snapdragon/OMAP/Adreno variants, It's not like Samsung/LG/HTC design custom ICs for use in their phones. They're basically ARM SOCs with some OEM branding. They have standard CDMA/GSM radios, so they don't need any proprietary drivers from Verizon or AT&T.
Google could release a "universal" Android version tomorrow and Verizon/AT&T/Sprint customers would download it in droves. Less bloat also.
I'd just tag it as apocryphal then... it's still a great quote, especially after the trillions of the Bush years.
bought Motorola for anything other than the patents, you're just fooling yourself. Having Motorola Mobility come with them was just the secret decoder ring in the cereal box. MM is not really as fun as it seemed at first, so time to put the toys away.
--- Void where prohibited. Your mileage may vary. ---
I just find it interesting that Google sells Moto, sure a maker of robust/reliable phones, but has capacity to make small wireless devices (routers, hotspots, RFID, monitors, sensors, etc...)....
and then buys Nest...
Looks like a changing of the guard. Moto culture likely fought with Google and Nest easily fits. The moto patents are a side story.
Apparently the New Yorker believes that Motorola was a "tumor" on Google largely because the lawsuits based on Motorola's patents have not been very successful.
See http://www.newyorker.com/online/blogs/elements/2014/01/motorola-google-twelve-billion-dollar-regret.html. And even as a pure phone manufacturer Motorola has been far outdone by others perhaps because cell phones like TVs have become commodity items more efficiently manufactured by Asian companies.
Motorola didn't just fuck Photon owners, it double-penetrated us with a fist and traffic cone & used silica grit for anti-lube.
There *seriously* needs to be a class action lawsuit against Motorola over that phone. To boost weak sales in late 2011, they explicitly promised it would get ICS... then locked the bootloader in May 2012 to make damn sure that if they weren't going to release ICS for the Photon, nobody ELSE could, either.