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

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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