The market is trying to make sense of Google’s $12.5 billion agreement to buy Motorola Mobility. (Google shares are down 2.8 percent in midday trading to $548, while Motorola shares are up nearly 60 percent.) Citi analyst Mark Mahaney, for one, thinks it is a “defensive” move.
In a research note he put out today after the announcement, Mahaney takes a skeptical view of the all-cash deal. “This may not be a bad use of cash,” he writes. “But is this GOOG’s best use of cash?” On the plus side, Google will get over 17,000 patents as part of the deal, a leading mobile handset manufacturer, and a stronger position in the living room with Motorola’s set-top box business.
On the downside, Mahaney worries what the impact might be on the Android ecosystem as a whole. Android has so much momentum already with 150 million handsets worldwide, why risk slowing that down with the distractions of absorbing one of the leading Android manufacturers? Making hardware is “FAR afield from GOOG’s core competencies.” And the regulatory approvals will take at least until the end of the year, if not longer, before the deal is likely to close.
So why is Google going through all the trouble? “The patents may be the key to this deal,” writes Mahaney, “but they also suggest a defensive nature to the deal.” Well, you can’t really blame Google for being defensive on patents when every other major tech company seems to be arrayed against Android.
Photo credit: Francisco Antunes
Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps, YouTube, and Google+, the company’s extension into the social space. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing...
Motorola is known around the world for innovation in communications and is focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to mobile and wireline digital communication devices that provide compelling experiences, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $22 billion in 2009