Google acquiring Motorola Mobility

[Jezter]

Happy Monday to you, and happy Monday to Motorola Mobility, which Google has announced is about to become its next acquisition. This comes hot on the heels of a $56 million Q2 net loss for Moto -- and CEO Sanjay Jha's less than subtle hints about going fishing for Android-related patent royalties. Now, at a price of $40 per share for a total of about $12.5 billion, Big G will be making Moto a "dedicated Android partner" to "supercharge the Android ecosystem" and "enhance competition in mobile computing."

Larry Page had this to say about the deal:
Motorola Mobility's total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.
What happens next? While this will of course strengthen the ties between hardware and software, Google is pledging to continue offering Android as an open platform -- Moto will license it and others will be able to as ever. Additionally, Google will continue to operate its new toy as a separate business and not morph it into an in-house hardware wing. But, one has to wonder what this means for companies like Samsung, which partnered closely with Google on the Nexus S, and of course HTC, which released the Nexus One and the iconic G1. And then there's the big question: just where does Moto Blur fit into this equation?

Update: More quotes from Android partners after the break.


Peter Chou, CEO, HTC:

We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.
Bert Nordberg, President & CEO, Sony Ericsson:

I welcome Google's commitment to defending Android and its partners.
Jong-Seok Park, President & CEO, LG:

We welcome Google's commitment to defending Android and its partners.

[AntZ]

Google to Acquire Motorola Mobility for $12.5 Billion


By Brian Womack and Zachary Tracer - Aug 15, 2011




Google Inc. (GOOG), maker of the Android mobile-phone software, agreed to buy smartphone maker Motorola Mobility Holdings Inc. for $12.5 billion in its biggest deal, gaining mobile patents and expanding in the hardware business.

Motorola shareholders will get $40 a share in cash, the companies said in a statement today. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the takeover.

Larry Page, Google’s co-founder who took over as chief executive officer in April, is transforming Google into a smartphone maker to take on Apple Inc. (AAPL)’s iPhone and gain more clout in the wireless business. Motorola Mobility, under pressure to seek strategic changes by activist investor Carl Icahn, gives Google more than 17,000 patents the company can leverage in negotiations with competitors such as Apple.

“This is the next step in building their position in the mobile world so they can distribute Google products and services through mobile phones and tablets,” said Clayton Moran, an analyst at Benchmark Co. in Boca Raton, Florida, who recommends Google shares. “They want a success with the Android platform and this will enhance their position in the mobile marketplace, as well as defend their position through the patent portfolio.”

Apple, which makes its own wireless software and hardware, briefly became the most valuable company in the world last week, helped by demand for the iPhone and the iPad tablet computer.

Motorola Mobility, based in Libertyville, Illinois, rose $13.92, or 57 percent, to $38.40 at 10:23 a.m. on the New York Stock Exchange. Google, based in Mountain View, California, fell $5.77, or 1 percent, to $558 on the Nasdaq Stock Market. InterDigital Inc., owner of mobile-phone patents that’s considering a sale, fell $14.87, or 20 percent, to $60.85.
‘Heck of a Premium’

Google is paying a premium of 73 percent compared with Motorola Mobility’s 20-day trading average price before today. The average premium of more than 360 deals in the wireless- equipment industry on that basis was 32 percent in the past five years, according to Bloomberg data.

“This is a heck of a premium” said Lee Simpson, an analyst at Jefferies International in London. Motorola Mobility’s patents are “a good counterweight if Apple comes after Google.”

Google agreed to pay Motorola Mobility $2.5 billion if the deal falls through, a person familiar with the matter said. Jennifer Erickson, a spokeswoman for Motorola Mobility, declined to comment on the breakup fee.
Android Rivals

The deal -- the largest wireless-equipment deal in at least a decade, according to data compiled by Bloomberg -- also makes Google a competitor to the other handset makers that use Android. In addition to phones made by Motorola Mobility, the software runs handsets made by companies such as Samsung Electronics Co. and HTC Corp. (2498)

“Google making an acquisition of one distinct player is going to put Samsung and HTC back on their heels and thinking, ‘Do we need to go forward with this platform?’” Simpson said. “‘Are there other platforms we can use?’ It might start to put Microsoft into focus as an alternative platform,” he said, referring to Microsoft Corp. (MSFT)’s Windows Mobile software.

Android, which Google gives away for free, will remain available to other manufacturers, the company said. Winston Yung, chief financial officer of HTC, gave his support to the deal, saying it will strengthen “the whole Android ecosystem.”

Google said Samsung and Android-phone manufacturers Sony Ericsson Mobile Communications AB and LG Electronics Inc. (066570) also support the transaction.

Microsoft rose 35 cents, or 1.4 percent, to $25.45 in early trading. Nokia Oyj (NOK1V), which plans to start making Windows phones, climbed 10 percent to 4.14 euros in Helsinki.
‘New Ground’

Android was the best-selling smartphone operating system in the second quarter as sales rose more than fourfold to 43.3 percent of the market, led by Samsung and HTC, according to research firm Gartner Inc. Apple had an 18.2 percent share, the researcher said. While Motorola Mobility’s Droid phones have found a following in the U.S., globally the company ranks outside the top players in the smartphone market.

“The combination of the two companies is going to create tremendous shareholder value, drive great user experiences and accelerate innovation,” Page said today on a conference call. “Motorola also has a strong patent portfolio, which will help protect Android from anticompetitive threats from Microsoft, Apple and other companies.”
End for Pioneer

The deal marks an end as an independent company for a company that helped pioneer mobile phones and introduced its first consumer handset in the early 1980s.

Motorola announced a plan to spin off its mobile-phone business in March 2008 amid market share losses and pressure from billionaire Icahn. The company then delayed the move amid the global recession before completing the split in January. Motorola Inc. became Motorola Solutions Inc., which makes radio equipment to emergency workers and scanning devices for retailers.

Last month, Icahn urged Motorola Mobility to explore alternatives for its patent portfolio after Nortel Networks Corp. sold wireless-technology intellectual property for $4.5 billion.

“This is a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets,” Icahn said today in a statement. “Motorola is activism at its best and we applaud management and the board for acting so responsibly.”

Since the January spinoff, Motorola Mobility shares have lost about a fifth of their value as the company has struggled to return to profitability and keep pace with larger rivals such as Samsung and Apple.


http://www.bloomberg.com/news/2011-08-15/google-agrees-to-acquisition-of-motorola-mobility-for-about-12-5-billion.html

[AntZ]

Google’s Motorola Deal Will Spur Antitrust Regulators To Action

Published on August 15, 2011
by Arik Hesseldahl



To say that Google is going to face some opposition to its proposed $12.5 billion acquisition of Motorola Mobility is what you might want to call a bit of an understatement.

First of all, the deal will give a lot of fresh meat to the U.S. Federal Trade Commission, which is already investigating several aspects of Google’s business, including its Android mobile operating system business. As The Wall Street Journal reported last week, investigators from the FTC and from the offices of several state attorneys general have been exploring whether or not Google prevents phone manufactures who become Android partners from using the smartphone operating systems of other companies.

If such were the case, the party most likely to suffer would be Microsoft, whose Windows Mobile operating system is, like Android, widely offered to smartphone manufacturers. The other one that comes to mind is Hewlett-Packard, which is in talks with several companies about licensing its webOS software, which came from Palm, the handheld company it acquired last year.

The FTC’s investigation, said to have begun in June, is still in its early stages and may not result in a lawsuit. But you can bet that this proposed acquisition will only quicken the FTC’s pace.

The offices of several state attorneys general will also want to weigh in. The AGs in New York, California, Ohio and Texas have all ramped up inquiries into Google’s dominance of the search business.

Also in the mix is the European Commission. Earlier this month Reuters reported that Google faces no fewer than nine separate antitrust complaints in Europe. Most of those complaints have to do with Google’s search business, but at least one of them came from Microsoft, who complained in March that Google blocks competition in the Web search business.

Google’s clearly sharpening its arguments for the coming fight. In the company’s official blog post announcing the deal, CEO Larry Page said Google will continue to work with other hardware companies on Android. The company says it works with 39 different manufacturers who build Android devices. But he also renewed a recent Google complaint that other companies are banding together to hurt Android by accumulating a pool of patents owned by Novell. That complaint touched off a war of words between Google and Microsoft.

In the blog post, Page insists that owning Motorola will not only give Android a kick, but will “enhance competition” and offer consumers “greater choice.” It will of course be interesting to see how that argument shapes up. The biggest question will focus on whether or not a Google-owned Motorola will get preferential access to new versions of Android before other manufacturers. Whatever happens, it’s going to take Google some time to get this deal done, and if it does get approved, you can expect some significant regulatory concessions.


http://allthingsd.com/20110815/googles-motorola-deal-will-spur-antitrust-regulators-to-action/

[Noilly Pratt]

I know a guy who was in this biz as an engineer. Was at Motorola, got bored because of the lack of challenge and was headhunted to Nokia. Became head developer and engineered a lot of their phones that do everything but make toast, and then was laid off when they started slashing jobs like crazy.

He is now at a local telecom company and is much happier.

[dmni]

Google acquiring a patent catalogue as much as anything to give them something to patent trade with the other big boys, mainly Apple and its current set of patent infringement lawsuits.