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In a significant development of the mobile technology industry, Google (NASDAQ: GOOG) agreed to buy the Motorola Mobility (NYSE: MMI). For $ 12.5 billion, or $ 40 per share in cash for the defense of their Android ecosystem
price tag of $ 40 per share represents a premium of 63 percent to the closing price of Motorola Mobility shares on Aug.12, 2011.
Motorola Mobility is a leading developer of communications systems used in wireless and cable television tržištima.Tvrtka has launched a complete turnaround over the past two years focusing on Android-based smartphone. Motorola represents about 11 percent of Android phones.
In the meantime, Google has not emphasized that Android will be open, and that Motorola Mobility will run as a separate business entity. Google also said that his top five OEM partners are all supporting the work.
work is expected in late 2011/early 2012, with customary closing conditions, including receiving regulatory approvals in the U.S., the European Union.
Without the amortization of intangible assets, Google expects the acquisition to be slightly accretive to earnings.
Google pays 15x 2011 EBITDA and 9x 2012 EBITDA, adjusted for Motorola balance of $ 3.3 billion and net operating loss (Nol) balance of $ 2.5 billion.
Here are the main reasons why Google buys Motorola and it's hefty price tag:
At first glance, it seems to handle large and expensive, and Google probably could have opted for a license, rather than buy. However, market analysts view the ownership of the 17,000-plus patents as an offensive term stake in the company wireless segment.
"The pure work more, we see more like 8.6x more than average, especially as the current comp group trades at a 6-9x NOPAT (net profit after tax). However, the patent-value, Google paid $ 735K per patent, which is in line with the $ 750k salary for a patent for Nortel patents - is much lower if you include cash and NOLs - about $ 513K per patent, "Susquehanna analyst Herman Leung wrote in a note to clients.
Price does not seem unreasonable, particularly with regard to estimates, about $ 3 billion a year plus the hidden costs of a patent for the Android ecosystem and $ 4.5 billion spent on Nortel patents.
While Android is open and free from Google, it can be hidden patent fee. According to media sources, HTC is currently residing Microsoft $ 5 per handset royalty, and Microsoft is reportedly looking for $ 15 fee per handset from Samsung to use Android.
"Assuming 200 million annually Android device patent fees of $ 5-15 per device, patent fees could potentially cost Android ecosystem + $ 1-3 billion per year," Raymond James analyst Shyam Patil said in a note for clients.
"it is unclear what drove Google to buy MMI MMI compared to only patents. We believe that it could be a complex cross-licensing agreements between the MMI and other handset OEMs, which is a legally complicated just to buy MMI patents," Patil said .
* Motorola and Google have a strong working relationship as Motorola was one of the first companies to adopt Android and using it as your only operating system inside a smartphone portfolio.
* Google Nexus S handsets are big hits in the industry. Using Motorola's handset expertise in the design, manufacture, distribution and supply chain management should benefit future versions of the device.
"closer cooperation between the software and hardware teams could lead to increased functionality in future Motorola / Google Search Appliance," Rodman & Renshaw analyst Blaine Carroll wrote in a note to clients.
* key reasons for the job is to defend the Android ecosystem from patent attack Microsoft, Apple i.Motorola patents will help Google in any potential litigation. Siemens Mobility has more than 17,000 patents issued 7500 and pending patent applications. Although many patents are older, they are basic fundamental wireless patents.
* With Motorola's portfolio of patents, Google should be in a better position to protect its handset partners who have invested in the Android platform over the years and turn some competitive pressure from Microsoft (NASDAQ: MSFT) are looking to expand its Windows 7 Phone ecosystem.
* A large part of the reasons this job is not only to preserve their Android ecosystem, but to go to work now with this portfolio of patents covering technologies such as 2G, 3G, 4G, H.264, MPEG-4, 802, 11, Open Mobile Alliance (OMA), and near field communications (NFC), to name a few 17K + patents.
, "his 39 OEM should be more comfortable licensing Android and offer some additional protection from other companies looking for additional fees. We believe a strong defense could be the best offense, especially if it is still early in the game, wireless," said Leung, who expects to work can add about $ 1.68 in EPS for 2012.
* Finally, the acquisition could boost Google's efforts to push into the digital living room.
"We note that the addition of MMI Home (set-top box), and catalyze the business could help Google push into the digital living room, where we see the company finally turned a sizable market opportunities in targeted video advertising (we believe that a large part of Google estimate $ 200 billion display advertising TAM relates to IP-addressable TV / video advertising), "ThinkEquity analyst Aaron Kessler said.
