Google didn’t really lose out on this Motorola deal with Lenovo

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Jack Holt

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When the news that Google sold Motorola to Lenovo for $2.91 billion broke out of the blue people were stunned. Some people threatened to sell their Moto X and Moto G phones. Others threatened to never buy another Motorola product ever again. Others, well, others thought that Google lost out big time on the deal. If you base the sale on simple math, then yes, Google lost roughly $10 billion in this sale making it a big flop in terms of acquisitions. So let’s break down the math.


First thing’s first. Motorola had roughly $3 billion in cash. It also had about $1 billion in tax credits. Subtract that from the initial sale and you get a price of $8.5 billion. Now factor in that Arris paid $2.4 billion for Motorola’s set top box business. The original sale price goes down to $6.1 billion. With Google selling Motorola to Lenovo for $2.91 billion, that price drops to $3.19 billion. As far as we’re concerned that’s still a hefty loss, but to a multi-billion dollar company such as Google, that’s just a drop in the hat. Of course that doesn’t include Motorola’s patents that Google acquired.

A regulatory filing from 2012 shows that Google valued Motorola’s patents at $5.5 billion. These patents are still in the Search Giant’s hands and 2,000 of them are being licensed for use by Lenovo. So based on a rough monetary statement, that puts Google at $2.31 billion ahead. That is based on what Google values the patents at and not what they’re actually worth, but most of those patents weren’t just for monetary gain. From a strategic standpoint, the company now has an easier time defending its Android ecosystem on top of being able to make money from selling off the divisions it didn’t need.

Motorola may still have operated at a loss for each quarter but even as such, Google really didn’t lose out on the deal. Of course this is based on fuzzy math and specific numbers could be completely different. The point of this, is that Google knew what it was doing. As of right now, some of Motorola’s key projects are staying in Mountain View so this acquisition may not be as bad as everyone seems to think it will be. Let’s all take a moment, breathe, and see how this plays out.

source: The New York Times


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