Shoot, I’d take a 63% return on my investment, wouldn’t you? It seem’s like a lot to us, but a Motorola shareholder thinks Google underpaid in their acquisition of the company Monday. The shareholder believes Google solely paid for the patents, and not the rest of the mobile phone business. To back up the shareholder’s statement, analytical firm Frost & Sullivan came up with the same conclusion. (Phandroid via ZDNet)
Motorola has a portfolio of 24,500 patents and patent applications that instantly bolsters Google’s strength in the IP war. Looking at some recent patent auctions and using some simple math can show why these patents were indeed the target of Google’s acquisition.
Continue after the break..
Using one of the industries recent patent auctions as a baseline, in December of 2010, Novell sold off its portfolio of 882 patents for $450 Million. A simple division calculation leads us to a value of $510,204.08 per patent. Why not round that figure off you ask?
Well, let’s look at the patent value of the Motorola acquisition.Forgetting that Motorola also makes mobile phones, let’s say the entire value of the acquisition was in their 24,500 patents and applications. At a $12.5 billion price tag, that equates to…drum roll please…$510,204.08 per patent. Can anyone guess what heuristic they used in the board room in valuing the deal?
In the Motorola acquisition, Google bought a patent portfolio and got a mobile phone business thrown in for free.
The shareholder and firm even believe Google paid a lot less the patents themselves, in contrast to the Novell patent sale, that many of Google’s rivals took part in.