If $12.5 billion seemed to some Google
shareholders like a lot of money to pay for a largely unprofitable handset
maker, the Internet search giant is now providing some details about its
rationale for the transaction.
In a quarterly report filed with the SEC today, Google broke down the price tag for its acquisition of Motorola Mobility, a
deal that is “expected to protect and advance our Android ecosystem and
enhance competition in mobile computing.”
Google valued Motorola’s patents and
technology at $5.5 billion and pegged its customer relationships at $730
million. Google has said Motorola’s patents were a key factor in its decision
to buy the company, as the assets provide it with legal ammunition to defend
its Android operating system against litigation from rival Apple.
It also included Motorola’s $2.9 billion
cash reserves and valued its other assets at $670 million. The additional $2.6
billion of goodwill value was attributed to “the synergies expected to
arise after the acquisition.”
Since first announcing the buyout last
August, Google has stayed quiet about how exactly it expects to benefit from
owning a company that manufacturers smartphones using its Android operating system.
It replaced Motorola’s CEO with its own
executive this spring, but has otherwise kept mum about its plans for the
company. The transaction closed in May after being held up by delays with
Chinese trade regulators.
Google CFO Patrick Pichette said during
an earnings call last week that the company was not ready to make its plans for Motorola public since the
deal closed “only a few weeks” ago. However, “everybody should
expect some changes at Motorola,” he said.
Motorola Mobility continued a long string
of losses last quarter, falling $233 million into the red on sales of $1.25
billion. The impact of that loss on its new parent company was insignificant:
Google made $2.8 billion last quarter on sales of $12.21 billion.
