Does the Google purchase of Motorola make sense? Will it make money for Google shareholders? Will the Google purchase of Motorola provide patent protection for Google Android operating system? That may be the key question relating to the $12.5 Billion Google purchase of Motorola. The payment of a more than 60% premium will be a nice early Christmas to Motorola shareholders. The eighty year old company split into two parts in early 2011 after a dismal three year run of losses. The Mobility division is the mobile phone/handset unit. The Google purchase of Motorola is a purchase of the Mobility division. Tech commentators are insistent that the point of the acquisition is the treasure trove of patent rights held by the Mobility division of Motorola. Google developed an open-source software for its Android operating system which gives it’s a price advantage over both Apple and Microsoft products. Of late there have been a number of intellectual property lawsuits largely believed to be anticompetitive in nature. The Google purchase of Motorola Mobility could, in theory, protect Google and its shareholders from lawsuits against its android system software and that, according to the tech community is why Google forked over $12.5 Billion in a bad economy. Learning how to invest in high tech, it would seem, requires knowledge of or good advice regarding not only tech issues but patent issues as well.
With the Google purchase of Motorola mobility four generation old Motorola has sold off its networking division to Siemens and its mobile device division to Google. What remains is a pale shadow of a company that was an American electronics giant in its day. By comparison Google is fifteen year old upstart that has grown into a software giant with a little hardware added, after the Google purchase of Motorola mobility. Google operates a million or more servers throughout the world and has a market cap of around $180 Billion. The core business of Google is still its search software but through a series of acquisitions the company is still expanding. However, acquisitions such as the Google purchase of Motorola mobility seem to be more defensive in nature and the days to Google skyrocketing share price seem to be over. Like Microsoft the company has largely converted into a tech stalwart, like Motorola used to be. It is interesting to speculate as to who will buy Google in the late 21st century. More to the point for investors today is what is a good investment and does Google qualify?
One bit of fundamental analysis is clear in that Google is no longer a startup with the potential for tenfold, hundred fold or greater growth. Nevertheless the company still has growth opportunities provided that it continues to create value that it call sell to its customers and, thus, value that it can provide for its investors. As always we are not promoting Google or suggesting that investors avoid the stock. Rather we offer the Google purchase of Motorola mobility as an exercise in thinking about investments and investing.