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Google actually spent only $4 billion on Motorola, analysts say, and it's keeping the patents

Google actually spent only $4 billion on Motorola, analysts say, and it's keeping the patents
Buying something for $12.4 billion, then selling it in a year or two for $2.9 billion, like Google did with Motorola, doesn't seem like a sound investment at first blush. Drilling deeper into the deal, however, analysts are now claiming that when all is taken into account, Google ends up with $4 billion spent on the entire deal, and it gets to keep invaluable mobile-related patents, which the patriarch Motorola had amassed over the years.

When Google acquired Motorola, the troubled phone maker had $2.9 billion of cash in hand, and subsequently the Mountain View team also sold the Home division for $2.35 billion. When we add Lenovo's purchase price, and some $1 billion in tax-credits for Moto, Google ended up paying just a tad over $4 billion, gained some valuable insight on hardware-making, sniffed at it, and kept the patents. Given how the rest of the Silicon Valley giants tried to gang up on Google by acquiring Nortel's portfolio under the offshore name Rockstar Bidco for $4.5 billion, Google's patent-proofing might even seem like a bargain, even when we add the money that Motorola lost during its tenure with the search giant. 

The moral of the story is that Google didn't lose nearly as much as it seemed when it sold Motorola to Lenovo, plus it calmed Android makers' worries, especially Samsung's. Moreover, it freed up resources to focus on its new robots and automation quest, after having won the mobile market share battle by a large margin.

source: BenedictEvans (Twitter), NYT & Bloomberg

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