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."

Comments

The numbers

[GeLeTo]

- $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

Re:The numbers

[alvinrod]

You should also include the ~$1B loss that Google incurred as operating expenses while owning the company. It's still worth taking a loss on the sale in my opinion and that patents that they acquired may well be worth even more than the loss. Motorola was going to continue bleeding money and placed Google in an uncomfortable position with the other hardware manufacturers.

Re:The numbers

[AlphaWolf_HK]

That might be well worth it though. Take a few things into consideration here:

- Of all people, they sold it to Lenovo, who has been rather disruptive in the PC making industry; not an easy thing to do even when they first started. Remember, they took the hardware division from IBM that was doing so-so at best, crappy at worst.
- Lenovo wanted to get into the mobile business before buying Moto. If I were to guess, they came to Google on this one rather than Google coming to them (there wasn't any rumors of "motorola for sale" that I recall...maybe I'm wrong here.)
- Lenovo going into the mobile business with Android is a VERY GOOD THING for Google and Android in general. Think about it: The more OEM's you have pushing Android, the better, especially if they can take some of the market share away from Samsung, which I think they are probably the most well positioned OEM to do so.

Re:The numbers

[Anonymous Coward]

There's no way google could bring down software patents in the US while Microsoft and Apple are pushing for them, along with a massive army of legal bods. Twat.

Re:The numbers

[GreyWanderingRogue]

And Google could have spent far less than $1.56B to lobby for the destruction of software patents that are costing manufacturers of Android devices billions of dollars in court, settlement, and licensing fees. But Google would rather talk out of both sides of their ass and say that they oppose software patents while taking no serious actions to work toward ending them.

This was Motorola (inventor of the cellphone). Not all patents are software patents.

Re:The numbers

[Anonymous Coward]

If you're going to include what amounts to a $75 million footnote, you should also include the much more significant operational losses Motorola incurred during the time Google owned it which will significantly increase the cost (by most accounts, almost double your figure which, admittedly, is still about a third what the summary erroneously suggests).

Not the whole story

[DeathToBill]

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.

Asset stripped..

[Dynamoo]

Asset stripped and dumped. Thanks, Google.

Re:Asset stripped..

[jratcliffe]

Asset stripped and dumped. Thanks, Google.

Classic case of whole being less than the sum of the parts.

Motorola Mobility consisted of:
1. a handset business
2. a set top box business
3. a patent portfolio
4. a bunch of cash
5. a bunch of tax assets, which the company couldn't use because it wasn't making enough money

Google wanted the patent portfolio, so it bought the company (the price of which incorporated the cash), utilized the tax assets (which had been worthless until MM was purchased), sold the set top box business to a set top box maker (Arris), and is now selling the handset business to a company in the handset business.

This isn't "asset stripping," since the pieces are worth more, and can be more successful, as separate pieces. It's breaking up a conglomerate that didn't make sense.

Re:who cares?

[bhagwad]

It doesn't matter if it doesn't matter. It's interesting and that's all that matters!

Re:who cares?

[Oysterville]

Stock holders do.

Google sucks at this

[bill_mcgonigle]

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.

Re:it went exactly as planned

[Anonymous Coward]

Here we go again...
 
Everything MS and Apple does is evil and they can't survive without leeching off of Google. Google is good and will lead us to the promise land where there will be milk and honey and Google will keep us safe from the bad MS and Apple.
 
Give it a frigging rest. We've seen time and time again that Google plays there games too. If it wasn't for you Fandroids they'd be on the heap of crap companies just like the rest.
 
At one time Google did some neat stuff for the man on the street and their employees. But Google grew up and we're starting to see how they're becoming like every other mature company on the planet.

lost of course in the story are the Employees

[BrianTarbox]

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.

Re:Pee-Wee Herman

[Jane Q. Public]

"I meant to do that!"

Indeed. Yet another Google acquisition messed up, then tossed aside.

It might have made Google stronger, but that's not the way to make the economy stronger. It's far closer to corporate raiding than any kind of improvement to America.