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How Badly did Motorola’s Losses Hurt Google?

January 30, 2014 - Written By Tom Dawson

 

When the news broke yesterday that Google and Lenovo had come to an agreement resulting in the sale of Motorola for $2.91 Billion, we were all a little shocked. It seemed like only yesterday the Moto X arrived and felt like a fresh start under the guiding wing of the search giant, but now they’re done with the company and Lenovo is buying up their main handset business. Google originally bought Motorola for a sizable $12.5 Billion so, when you think that they actually sold the company for just $2.91 Billion, it looks as if Google has gotten the rough end of the deal here. Well, it turns that buying Motorola might not have been the brilliant idea we first though, but it’s certainly not a train wreck, either.

Poor sales of the Moto X and continuing operating losses by Motorola will have no doubt hurt Google’s bottom line, with operating losses ranging from $233 Million to $527 Million every quarter that Motorola was under ownership by Google, it doesn’t look good. However, Google originally said that they were more interested in the patents held by Motorola, which they valued at $5.5 Billion. So, $12.5 Billion minus $5.5 Billion worth of patents and you’ve got $7 Billion spent on Motorola. Now, factor in the $2.9 Billion worth of cash that came over from Motorola at the time of purchase and we’re left with (approximately) $4.1 Billion of Google’s money spent on Motorola. That’s not counting the sales of manufacturing assets and the sale of the set top box business side of things to the Arris group for $2.35 Billion, either. Just like the guys over at Android Central, we’re not accounts, but it seems to us that Google might not have been stung quite as badly as we might think.

The fact is, Google has done some selective accounting here and taken stock about what’s good and bad about Motorola. They’ve got a large amount of patents from Motorola and licensed a lot of them to Lenovo in the sale, which will prevent patent litigation against an up and coming Android partner. Google has also kept the advanced technology division, which is home to the likes of Project Ara, so Google has clearly kept what they wanted, what they thought was valuable to them. Google buying up a prominent Western Android partner was bound to be trouble for the entire ecosystem and as Larry Page said after the sale, this will lead Google to focus on the whole picture once again.

Source: Android Central