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Google is promoting synergy (like a boss).  (Source: NBC)
Surprisingly, Google says that cash and "goodwill" were also big drivers

Google Inc. (GOOGsurprised the tech world last year with its decision to scoop up struggling veteran devicemaker Motorola Mobility, Inc. -- one of the "big three" of the Android world.  Some figured that Motorola's "war chest" of over 17,000 patents amounted to nearly the entire $12.5B USD valuation Google made in its successful purchase bid.

Traditionally, Google did not look to patent its software innovation at the same pace as rivals Apple, Inc. (AAPL).  With a lawsuit from Oracle Corp. (ORCL) directly targeting Google and with Apple turning up the lawsuit pressure on OEMs, many felt Google needed to buy the patents to defend itself and its partners.

But in newly released regulatory filings Google says the patents represented less than half the valuation.

Google's breakdown of Motorola's worth is as follows:
  • Patents:     $5.5B USD 
  • Cash:         $2.9B USD
  • Goodwill:   $2.6B USD
  • Customers:   $730M USD
  • Other:           $670M USD
For those curious what exactly Google means by "goodwill", the company elaborates slightly that it is "primarily attributed to the synergies expected to arise after the acquisition."

However, Google has left just about everyone in the dark as to exactly what those "synergies" might be.  During its earnings call, it did not discuss its long-term strategy or plan for Motorola.

Google completed the acquisition in May, after Chinese regulators finally stopped dragging their heels on approval.   U.S. and European antitrust regulators approved the acquisition months before.

One thing is for sure; whatever Google's secret "synergies" may be, they have yet to take hold.  Motorola Mobility made $1.25B USD in revenue in the second calendar quarter, but lost $233M USD, once operating expenses were taken into account.  Google still managed to earn $2.79B USD, though, despite that hardship.

Source: WSJ



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RE: But first...
By dtguest2 on 7/29/2012 4:37:49 PM , Rating: 2
That sounds believable,barring new information. The Motorola CEO made a good sales pitch for the value of the patents at the time:

We own one of the strongest and most respected patent portfolios in the industry. We have over 17000 patents granted and 7000 patent applications pending, with particular strength in 2G and 3G essentials, non-essential patents important to the delivery of the competitive products in the marketplace, video, particularly compression/de-compression and security technologies, and, finally, a leading position in 4G LTE essentials. With new entrants in the mobile space, resulting from the convergence of mobility, media, computing and the internet, our patent portfolio is increasingly important. We regularly review the company’s strategies, opportunities and assets, including the IP, with the goal of creating and enhancing value.

when I first came here (to Motorola), one of the reasons that I liked this opportunity, was because I had a view that brand and IP portfolio was very strong. As I arrived here and had had a chance to understand our IP portfolio, I actually think it’s stronger then I anticipated. There are really a few areas where our patent portfolio is extremely strong. First, 2G/3G essentials, I think that is very well understood by the (Wall)street and the industry, and we have monetized that asset over the last few years very well. Probably a little less well known is our strength in patent portfolio in non-essential patents, which are capabilities that are important to have in delivering competitive products in the marketplace. Third, I think is in our video coding/de-coding and security, and fourth, probably least understood and most underestimated , is our strength in our 4G LTE patent portfolio. As I look at these patent portfolios, I feel very good that we will be able to go forward and find ways to create enhanced shareholder value.

… that (IP royalty) number has come down over the years as a result of licenses that have expired over that period of time, and they are largely related to our 2G and 3G patent portfolios. As we go forward, I think that the introduction of number of players with large revenues, which have come into the marketplace as a result of the convergence of the mobility, computing, internet and other segments, I think that that creates an opportunity for us to monetize and maximize the shareholder value in a number of different ways and we evaluate all of them all the time.

http://www.unwiredview.com/2011/08/01/did-motorola...


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