Google sells Motorola for $3BN

[EEVblog]

http://qz.com/172207/why-google-just-sold-motorola-to-lenovo-for-3-billion/

So they have effectively swapped Motorola for Nest.
Can someone please explain this?, because I cannot come up with a single rational logical explanation...

[BravoV]

....bought for $12.5 billion in May of 2012, to Chinese PC maker Lenovo for $2.91 billion.

12.5 - 2.91 = 9.59 

Let me guess, some fishy accounting trick ? Google is known really good on this kind of stuff, like the tax evasion in the past that saves the company for billions. 

[mtdoc]

I think you nailed it during the recent Amp Hour episode- It's all a big money laundering/accounting scheme.  Take a loss on the Motorola sale and amortize the Nest acquisition?       I don't know the specifics - I'm no accountant but I'll bet there's a  tax shelter/inflation of quarterly earnings angle to it somewhere - if not something more nefarious...

[Homer J Simpson]

http://www.usatoday.com/story/tech/columnist/baig/2014/01/29/baig-lenovo-motorola/5039201/

http://www.usatoday.com/story/tech/2014/01/29/google-selling-motorola-lenovo/5035673/

[Zad]

I wonder if they will keep various chunks of Intellectual Property? That's what they seemed to be after when they bought Motorola, to protect their investment against Apple / Microsoft / Samsung / Whoever.

[tom66]

I thought the reason they bought Motorola was for patents on various parts they intended to licence.

Android manufacturers currently pay per-unit fees to Microsoft and other companies for some bullshit patents; who knows, Google could be doing the same for Windows Phones.

Motorola's business was near dead when Google bought them.

Someone, please help me understand how losing over $9bn on a transaction can save you more tax $9bn loss, loses?

[mariush]

Bingo. Patents.


http://www.techdirt.com/articles/20140129/14370626037/google-dumps-motorola-keeps-patents.shtml

Well, that little pipedream is now over, with Google selling off the handset business to Lenovo for $2.91 billion.

Some are pointing out the rather massive difference between this and the initial purchase price of $12.4 billion, but that leaves out a lot: mainly, Google is keeping the patents and just licensing them back to the company. In 2012, Google claimed that it valued the patents at $5.5 billion. Also, it got $2.9 billion in cash from Motorola, and I'd imagine that's not going to Lenovo too... Instead, at the time of the acquisition, Google said it valued Motorola's customer relationships at $730 million and "other net assets" at $670 million -- and then had another $2.6 billion in goodwill (more or less the premium Google had to pay to get Motorola to sell). Given that, the sale isn't a huge "loss", though it does make Google look kind of silly for pretending it was really in the hardware business for a bit.

In the end, just as we predicted at the beginning, this is a story of the silly things a tech company is forced to do these days because of our stupid patent laws. The end result here pretty much confirms it all. Google shelled out $12.4 billion for a bunch of patents and hung onto a hardware business it never really wanted, and which it has now discarded. Without the pointless patent battles, it's unlikely Google ever would have bothered.

With these patents, Google was able to make a cross patent deal with Samsung : http://www.bbc.co.uk/news/business-25908364

Google and Samsung have signed a global patent cross-licensing agreement aimed at reducing "the potential for litigation" and enhancing innovation.

The deal will cover "a broad range of technologies and business areas" and apply to both existing patents and any filed over the next decade.

Both companies already work together closely, with Samsung using Google's Android mobile operating system.

Few other details were provided in a statement posted online.

Samsung called the deal "highly significant for the technology industry" and said it reduces the likelihood of Google and Samsung facing each other in court over intellectual property disputes.

The move is also expected to strengthen their position against rivals such as Apple, which has filed multiple lawsuits worth billions of dollars for alleged patent infringements.

[tom66]

A lot of money for "me first!" patents. Shows how bad first-to-file systems lead to this kind of patent hoarding.

I wish it was a "first-to-file and to demonstrate practical product" but then half the patents would be gone. 

I wonder if all that money on litigation were spent on a Primer-type time machine...

[Rory]

Lenovo: First IBM personal computers, now Motorola. What's next? Intel? AMD?

[gxti]

Well IBM just sold their server division to Lenovo less than a week ago, so there you go!

Regarding the Motorola sale, yep it's about the taxes: http://www.forbes.com/sites/timworstall/2012/12/22/did-motorola-mobility-only-cost-google-1-5-billion/

They keep the patents, they get tax benefits, and don't forget they already sold off a different part of the Motorola business.

[Bored@Work]

A lot of money for "me first!" patents. Shows how bad first-to-file systems lead to this kind of patent hoarding.

Ehm, until recently the US had first-to-invent. And under this doctrine they created what some perceive the worst patent system world-wide. They now moved to first-to-file-with-a-twist.

Large organizations benefited most from first-to-invent, because they could afford to go through the legal process and hire experts to proof they did it first. And it provided a great incentive to hide an invention until someone else invested a lot in some product.

I wish it was a "first-to-file and to demonstrate practical product" but then half the patents would be gone. 

That would exclude small inventors even more, who can't afford to develop and build a product. It would exclude all research labs who only do research, not product development. It would exclude all universities. It would exclude all ground-breaking, forward-looking inventions for which one can't predict an application today.

[TerraHertz]

Since I have very fond memories of Motorola chips, and the company making them, while in the last few years I'm developing a serious case of Google-loathing, superficially this is great news. So Motorola isn't part of that evil octopus anymore, hurrah!

I wish a company like Motorola could be just a chip maker, doing their best to make great products. But the economic situation has become so screwed up that isn't really possible any more. Too much corporate aggregation, too much patent portfolio consolidation, too much funny-money abstractions distorting markets (stock and physical), too many creepy umbrella holding companies and their bizarre ideas of how to manage subsidiaries. Danaher and Tektronix for instance.

So pessimistically, I wonder what new bad news this means for Motorola?

Oh well.

[Bored@Work]

Since I have very fond memories of Motorola chips, and the company making them, while in the last few years I'm developing a serious case of Google-loathing, superficially this is great news. So Motorola isn't part of that evil octopus anymore, hurrah!

I wish a company like Motorola could be just a chip maker,

Motorola isn't a chip maker for some time now. Motorola sold a large part of its semiconductor business to ON Semi in 1999. And in 2004 it spun of the remaining parts under the name Freescale.

And remains of the Motorola of old times got again split into two companies in 2011. One part of that split, Motorola Mobility, is what is currently kicked around by Google.

[XOIIO]

Since I have very fond memories of Motorola chips, and the company making them, while in the last few years I'm developing a serious case of Google-loathing, superficially this is great news. So Motorola isn't part of that evil octopus anymore, hurrah!

I wish a company like Motorola could be just a chip maker,

Motorola isn't a chip maker for some time now. Motorola sold a large part of its semiconductor business to ON Semi in 1999. And in 2004 it spun of the remaining parts under the name Freescale.

And remains of the Motorola of old times got again split into two companies in 2011. One part of that split, Motorola Mobility, is what is currently kicked around by Google.

Heh, I can see google execs playing soccer passing around a ball with the Motorola logo on it XD

[TerraHertz]

Motorola isn't a chip maker for some time now. Motorola sold a large part of its semiconductor business to ON Semi in 1999. And in 2004 it spun of the remaining parts under the name Freescale.

And remains of the Motorola of old times got again split into two companies in 2011. One part of that split, Motorola Mobility, is what is currently kicked around by Google.

Oh. I didn't realize Motorola no longer make any chips. 

[rsjsouza]

Cellphone handset market is a tough business to be. You need to release an extremely complex piece of hardware for close to nothing and with a ridiculously short product lifetime. I don't envy Lenovo.

One thing that Motorola does well is radio/RF technology, which seems to be part of their core business now. However most of it is for the more profitable B2B market.

One thing that will really bug me is that if we end up having Motorola-branded things in the retail market that will capitalize only the brand name (à la RCA, Westinghouse and others) but are utter pieces of crap.

As an example, I use one of their wireless baby video monitors (designed by the original Motorola company) and can attest how well they do radio (the competition pales in terms of battery life, range and signal integrity). The baby monitor business is part of the "new" Lenovo/Motorola. I would hate to see the quality of this going downhill to increase sales.

[VK3DRB]

Lenovo is associated with make low end crap computers full of bloatware. Motorola once held great respect for its quality and innovation. It can only be downhill for Motorola.

In the days of the real HP, it was about high quality trusted test equipment from a company founded by two remarkable engineers who were associated with vision to produce the finest test equipment in the world to help people like them - engineers. In my opinion, HP has lost its way and will disappear, as will Motorola and IBM in the not too distant future.

On the smaller scale, Dick Smith once actually sold electronics components and they had at least some respect in electronics community. Now they have become a laughing stock. No self respecting electronics enthusiast would dare set foot in one of their stores, at least not without a disguise on. They don't even know what a resistor is, let alone sell any.

The world has indeed changed and will continue to do so.

[calexanian]

My friends grandfather was an exec at Motorola in the late 50's early 60's in the semiconductor division. I believe he was the president of the division for a while. That is a whole world apart from todays company though. 

[dexters_lab]

article on the register about it today, makes some interesting points on tax

http://www.theregister.co.uk/2014/01/30/google_motorola_mobility_lenovo_sale/

[zapta]

I don't envy Motorola's employees. Been once in a similar situation and HR distributed Who Moved My Cheese to all employees.  Not fun.

However  this is how the free market works. Market leaders decay (DEC, HP, Motorola, Silicon Graphics, Sun, National Semi, etc) and new ones replace them (Apple, Facebook, Intel, Google, etc). Some manage to adapt  (e.g. IBM) and some do not (e.g. Microsoft). 

Gone are the days  of working entire ones' career at a single company and retiring with a gold watch and a pension. Things are moving faster these days and today's market leaders are not immuned, new challengers will rise and take control.

"What goes up must come down
Spinnin' wheel got to go 'round"

[Bored@Work]

HR distributed Who Moved My Cheese to all employees.

I have heard that before. Is it a common thing in the US to distribute that book when bad things are about to happen?

[zapta]

HR distributed Who Moved My Cheese to all employees.

I have heard that before. Is it a common thing in the US to distribute that book when bad things are about to happen?

I got it only once but according to this expert it is.

"Louis Uchitelle: Who Moved My Cheese? is a best-selling book that is often distributed to people who have been laid off. "

http://www.multinationalmonitor.org/mm2006/072006/interview-uchitelle.html

A college friend of mine used to work for national semiconductors. He survived 11 layoffs and got caught in the next one. He said that they were calling people to HR and then circulating an email announcing the end of the round. Very bright guy, when we learned math in college he actually understood it. I referred him to a better job and  he is happy ever after. In his specific case, layoff worked well for him, but the uncertainty can be tense.