Google buys Hardware company for $12.5 Billion

Posted by – August 16, 2011

Here are some numbers according to Josh Pritchard, posted on Quora about a week before this acquisition was announced:

–Motorola actually has ~$3.2B in cash (~$170M are “cash deposits”), with $200M more coming from Motorola Solutions, per the terms of the separation.
–They have $2.4B in deferred tax assets, that Google presumably plans to use (the media seems to be completely missing this one).

So, if you net the cash and tax assets, it’s more like ~$7B that Google is paying for the operating businesses and the patents.

Motorola Mobility has $6.2 Billion in assets (buildings and other stuff?) according to Wikipedia. Google gets 19 thousand new employees (up from 29 thousand current Google employees, a 65% jump in employee count).

Of course, what everyone is talking about are those 17 thousand patents and 7 thousand pending patents that Motorola Mobility has. Consider Motorola is a 80 year old company. Their patents most likely include many of the interesting Hardware Patents, I’m not a lawyer, but I am pretty sure strong Hardware Patents are worth much more than bogus software patents. This means Android, Chrome OS, Google TV can stay free and open source forever. Apple and Microsoft have to drop all their bogus lawsuits against Android companies immediately. Google now has the patent on the mobile phone, the Apple iPhone can be illegal tomorrow if Google wants it to be.

What do I think Google is going to do:

1. Ask the genius team behind the Motorola Atrix to join the Android team to make a platform that combines Ice Cream Sandwich, Google TV and Chrome OS into the ultimate ARM Powered device. Provide that solution as an all-in-one standard for the Android ecosystem and not just make it one product.

2. Interview any of the other 19 thousand employees at Motorola Mobility, ask who wants to work within Android, within Google or remain within Motorola Mobility and to do what. They can invent some genius interview process so somehow everyone gets what they want and what they deserve.

3. Maybe Samsung, HTC, Sony-Ericsson or simply the stock market are later offered to buy back the Motorola Mobility Hardware division without the patents but with free unlimited licence to use any of the patents on Android devices. In 6 months, if the stock market has somewhat recovered, Google may get all their money back for that.

4. Or Google can find use in owning Motorola, perhaps ask Motorola to design hardware such as Cheap $50 Android phones to bring Android to all people in the developing world, special focus on Brazil, Russia, India, China (potentially 1-2 Billion Android phones can be sold there in 1-2 years), Google can ask Motorola design $50 ARM Powered Google TV enabled Set-top-boxes that all consumers and all Pay-TV providers are going to use.

5. Maybe Android is mature enough (owning more than 80% of the smart phone market by the end of the year), Google may want to use Motorola to launch White Spaces networks worldwide for free wireless broadband for all. $99 Android phones unlocked that include unlimited free Google Voice, unlimited free wireless broadband in every city all over the world. White Spaces are unstoppable. Maybe this is the time. They can bundle a Motorola router with the phone, you plug it to your home ADSL/Cable/Fiber to expand that White Spaces network in your neighborhood.

  • http://www.noisetech-software.com/Home.html Steven Noyes

    WOW.  I am really starting to think you believe all the lies you write.  Pretty much you are 100% wrong on every account but lets take one:

    “Samsung alone sells more Android phones than Apple sells iPhones. ”

    Given Samsung shipped, at most, 32 million smartphones last quarter and that included >5 million Bada and 1 million WP7 handsets, that allows for about 26 million Android handsets TOPS.  I know a few estimates have it at 35 million but ASP would only support that if Bada shipments were in the >8-9 million units.

    Apple sold >37 million iPhones.

    Funny thing is, I can do this point by point and show where you are outright lying through your fingers and you still would jump up and down like a child saying it can’t be true, it can’t be true, it can’t be true.

    The best part it, you actually believe Google pulls in a total of $2.7 trillion  USD (you read right trillion) per year in revenue.  That is what Google would have to be making to support the rest of their balance sheet add up if they made $40/Android handset/year.

  • http://www.noisetech-software.com/Home.html Steven Noyes

    WOW.  I am really starting to think you believe all the lies you write.  Pretty much you are 100% wrong on every account but lets take one:

    “Samsung alone sells more Android phones than Apple sells iPhones. ”

    Given Samsung shipped, at most, 32 million smartphones last quarter and that included >5 million Bada and 1 million WP7 handsets, that allows for about 26 million Android handsets TOPS.  I know a few estimates have it at 35 million but ASP would only support that if Bada shipments were in the >8-9 million units.

    Apple sold >37 million iPhones.

    Funny thing is, I can do this point by point and show where you are outright lying through your fingers and you still would jump up and down like a child saying it can’t be true, it can’t be true, it can’t be true.

    The best part it, you actually believe Google pulls in a total of $2.7 trillion  USD (you read right trillion) per year in revenue.  That is what Google would have to be making to support the rest of their balance sheet add up if they made $40/Android handset/year.

  • http://ARMdevices.net/ Charbax

    You don’t have Samsung numbers, the Koreans do not give you their Smartphone sales numbers.

    And you obviously don’t know how to calculate. If all 250 million Android phones were in use $40/phone/year is $10 Billion per year. But since not all 250 Million Android devices are still in use, the number is closer to $5 Billion per year. That is, the revenue from Android for Google every year. That does not include the increase in revenue Google gets from iOS, Windows Phone, BB, etc, Google makes money on all platforms as all are forced to improve to compete with the awesome Android phones on the market. Yet obviously Google makes most revenue per phone when the phone is Android, simply cause more Google services are better integrated with Android unlike that crappy Wolphram piece of shit example on Apple Siri.

  • http://www.noisetech-software.com/Home.html Steven Noyes

    “You’re welcome to put all your money in AAPL stock, don’t come back tell me I didn’t warn you when it’s worth less than half 6 months from now.”

    The question is if you will ever open your eyes and start to understand either technology or business. Magic 8 ball says: No.

    Oh, yea, my stock keeps growing and did not loose half its value in the past 6-7 months.

  • http://ARMdevices.net/ Charbax

    Your Apple stock is ripe for total sudden collapse. Those Apple morons have actually gone thermonuclear on Android, it’s only a matter of weeks before South-Korea and China cut them off, instantly overnight Apple has zero, has nothing, all 99% of Apple current profit gets destroyed as Those Asians stop feeling like being insulted by this Apple American arrogance. Apple is less than 5% of Chinese consumer electronics production, China can easily absorb that under Chinese brands and with any other customers worldwide, China doesn’t need The USA, The USA is 5% of the world population, in the next 2-3 years upwards 5 Billion other people are getting connected to the web through devices that China can manufacture. This whole moronic arrogance thinking they can tell The Asians that Apple invented the rectangle, Apple invented the Capacitive user interfaces, just hope Apple looses all these lawsuits or its a shortcut to Apple’s total destruction worldwide.