The smoke has cleared on Google’s $12.5B purchase of Chicago-based Motorola and now that almost everyone has had a chance to speak, I think we’re starting to understand what went down.
Google purchased Motorola (MMI) for $12.5B, a 63% premium over its weekend closing price. Motorola, however, has around $3B in cash and securities, which makes the real purchase a slightly more reasonable $9.5B for Google. For instance, if Google wanted to slice and dice Motorola, they’d take the cash and patents and sell off the cable box and device divisions for a couple billion dollars each and come away with about what they would have paid for Nortel – and get double to triple the patents. On sheer numbers of patents alone, it seems like a good buy. Obviously some patents are worth more than others.
If the deal doesn’t go through, Google owes Motorola $2.5B for the trouble, so Google is dead serious about this play.
But back to what Motorola does: They have IP, they make smartphones, they make tablets and they make cable top boxes. It seems like almost too good a setup for Andy Rubin’s Android to just want to sell off piecemeal.
But did Google want to pick up a hardware company? I reported earlier this year that the Android Hardware division that Andy Rubin had started up with former Danger Co-founders had intentions to build physical devices, not just Operating Systems.
That scale is what attracted and the former Danger founders to get the band back together, with their goal being to build the hardware and features they want to see show up in new Android devices. It’s not enough for Google to just provide Android software to carrier — now they hope to influence what handset makers build, too.
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