Google´s $12.5 Billion Deal with Motorola
8/16/2011 09:37  Source:Forbes  

Looking at Google’s surprise announcement today that it will acquire Motorola’s handset business, Motorola Mobility, for $12.5 billion, it’s easy to understand Google’s motivation. The deal will give Google a portfolio of patents, the ability to design hardware to accompany its mobile software (Android) and ensures that a significant mobile player (Motorola) stays out of its rivals’ (Microsoft, HP, etc.) clutches. Moreover, the purchase price won’t strain Google, which has approximately $39 billion in cash.

Motorola’s motives and sentiments are more difficult to discern. The company, which was spun out from the original Motorola earlier this year, along with its sister company, Motorola Solutions, was widely regarded as struggling in recent months. Some of that bearish sentiment came from comparisons to competitors like HTC and Samsung, which have been flourishing.

Financially, however, Motorola had been doing all right. Its second-quarter results, which came out in late July, were solid. The company reported $3.3 billion in revenues, which beat analyst estimates of $3.1 billion. Its earnings per share of $0.06 was in line with expectations. Motorola also met expectations with its global smartphone shipments: 4.4 million units in the second quarter.

Behind the numbers, some of Motorola’s trend lines were worrying, though. Smartphone shipments in its home – and largest – market of North America had slipped in comparison to last year. (International markets like China and Latin America compensated for the decrease.) The average selling price for its devices dropped to $221 from $229.

Motorola also lacked a strong lineup of 4G/LTE phones at a time when the mobile industry seemed fixated on this faster wireless technology. The company’s foray into tablets, which looked so confident earlier this year, had already proved to be a sales disappointment. And Motorola was embroiled in multiple patent-related lawsuits with Microsoft, though the same is true for many mobile companies.通信世界网

    
          
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