Google Sells Motorola Mobility To Lenovo For $2.91 Billion 172
_0x783czar writes "Google today announced that they will be selling Motorola Mobility to Lenovo for the sum of $2.91 billion USD. Google says the move should allow the company to receive the attention and focus it deserves in order to thrive. From the announcement: '[T]he smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It's why we believe that Motorola will be better served by Lenovo — which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.' Google was quick to add that this does not signal a move away from their other hardware projects. Additionally Google will 'retain the vast majority of Motorola's patents,' which they hope to continue using to stabilize the Android ecosystem. The deal has yet to be approved by either the U.S. or China."
ouch! (Score:3, Informative)
That's gonna leave a mark. A -$10 billion mark!
captcha: failure
Re:ouch! (Score:5, Interesting)
Yeah. I need to get in the middle of one of these transactions somehow.
Google seems willing to pay 10B to rent companies for a while...
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also, they just paid $3b for nest, wonder when they'll sell that off. seems like they're grasping at straws here.
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also, they just paid $3b for nest, wonder when they'll sell that off. seems like they're grasping at straws here.
If Nest owners could only be so lucky.
More likely they'll go a couple years, realize its not of any use, and shut it down.
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also, they just paid $3b for nest, wonder when they'll sell that off. seems like they're grasping at straws here.
If Nest owners could only be so lucky.
More likely they'll go a couple years, realize its not of any use, and shut it down.
I remember when that was what Microsoft did on a regular basis. Must be something which companies do once they hit a certain level of revenue.
we made fifteen billion last quarter, let's go buy the corner donut shop for three billion and then shut it in a couple of years
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It's probably more like "Lets make a group of my friends BILLIONAIRES!"
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big companies waste money like its going out of style. if you or I wasted like they did, we'd be homeless.
but its 'ok' if you are a mega corp. you're 'expected' to be wasteful.
thing is, think of all the good (for people) that could have been done if companies spent money like you and I spent money: responsibly!
I look at corporate waste like expensive artwork in lobbies, huge logos that cost money, large buildings that they really don't need - and it annoys me that those that have so much, essentially wast
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It isn't so much that big companies are wasteful, but that when you've reached a certain level of market saturation in your core business area the only way to expand revenue in any significant way is to expand into new business areas. You can almost think of these as new business ventures as opposed to simply purchases by a company, and most new business ventures, even those by established players, fail.
That said, the Motorola purchase seems particularly insane, the only logical reason for Google to make th
Re:ouch! (Score:4, Insightful)
That said, the Motorola purchase seems particularly insane, the only logical reason for Google to make that purchase was to build their own phone which is something they didn't even try.
"Patents". [wsj.com].
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Only if they get to keep them.
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Only if they get to keep them.
They did. You should really read a bit more about a topic before posting: http://www.bbc.co.uk/news/busi... [bbc.co.uk]
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big companies waste money like its going out of style. if you or I wasted like they did, we'd be homeless.
No, rich people waste money like it's going out of style. Hell, a couple of meals at a NYC 5 star restaurant and I'd probably be in debt and homeless.
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I remember when that was what Microsoft did on a regular basis.
*Cough* Nokia *Cough*
Re:ouch! (Score:4, Interesting)
Pretty sure Microsoft will only shut down the Nokia handset manufacturing (there's more to Nokia than that, but I don't have a handy name for it like "Motorola Mobility") if they decide to abandon the smartphone OS business entirely. Which they could do, admittedly, but I'd be surprised. They've achieved a pretty solid third place in the market, with an overall marketshare similar to that of OS X among PCs. They've started being taken more seriously by major app developers. They're rolling out updates at a decent rate, and many of the crippling issues of the app model in WP7 are already fixed.
That doesn't mean they won't spin off or re-sell that portion of the business, of course. I'd be surprised if they just killed it though, unless they want to give up on phone OSes entirely. There are at least three other OEMs making WP8 handsets (HTC, Samsung, and Huawei), but the Nokia Lumia line predominates.
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Chances are, they will just take the Nest patents, disassociate the Nest website and do all the work on an Android app on your phone.
There is really precious little need for there to be a mother ship for a thermostat to call home to.
Re: ouch! (Score:5, Insightful)
Not at all, Motorola seems to be making better phones now, and Google has the parents. I assume the purchase was very hedging, in case android as an ecosystem didn't take off, they could try to make them alone. The need to hedge is over, Google gets some money, and a company that has proven it's ability to manage american brands is in the mix.
Google can now release moto based nexus items (if they dream moto to be good for it), without threatening the ecosystem.
The hedge on android probably was worth it to them.
Re: ouch! (Score:5, Insightful)
Not at all, Motorola seems to be making better phones now
WAY better phones. In fact, except for problems like no SD card slots or removable batteries, I think they're making arguably the best phones in the market. Moto X is no Optimus G2 in terms of speed, but it's plenty fast, its battery lasts the whole day and it has brought something new to the table: voice commands. I think it's pretty useless, but at least it's something new. Notifications that take advantage of the AMOLED display were also cool. Moto G is simply the best value for money right now, it's putting every other phone maker to shame. Both can take a fall and are already running KitKat. If you remember Motorola had the Razr HD going against Samsung's Galaxy S3, you can recognize they improved Motorola's game immensely. Maybe Lenovo will carry the momentum, but I fear not. It's a shame, because I really liked where Motorola was going.
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Yes, voice commands are mostly useless, and the the AMOLED notifications were first implemented by the trusty old Nokia N9 years ago.
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Re: ouch! (Score:5, Insightful)
Not at all, Motorola seems to be making better phones now, and Google has the parents. I assume the purchase was very hedging, in case android as an ecosystem didn't take off, they could try to make them alone. The need to hedge is over, Google gets some money, and a company that has proven it's ability to manage american brands is in the mix.
Google can now release moto based nexus items (if they dream moto to be good for it), without threatening the ecosystem.
The hedge on android probably was worth it to them.
Android had already captured about 75% of all hanset sales by the time the Moto Buy happened.
So I don't think they were hedging.
However, you might have hit the mark after all, in a slightly different way: Preventing Android from being eroded.
Its entirely possible there was a quietly brewing manufacturer revolt going on due to Google competing with its user base by manufacturing phones.
Samsung leaked a Tizen Phone [digitaltrends.com], and Mozilla funding a phone OS (paid for by Google, as is 95% of everything Mozilla does), and the Chinese also brewing up a phone OS, it might have come to Google's attention that getting rid of Moto might have been the best choice.
They keep the patents, secure Android's future, and already pocketed the tax write off when acquiring Moto's debts. Win, Win, Win.
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It's also possible they just wanted to prevent Moto ending up in the hands of someone non-Android friendly, like say, Microsoft as Nokia has ended up.
By buying them they remove that threat and then have the freedom to spend time finding someone who they can sell to that is willing to commit to working with Android and who isn't likely to themselves sell it on again any time soon.
Re: ouch! (Score:5, Insightful)
Conversely, the biggest problem with the purchase for Google is that it could make the other Android device manufacturers nervous that Google would give Motorola preferential treatment. In turn, they might contemplate a jump to Windows Phone, Samsung's Tizen, or the Chinese fork of Android called Aliyun.
So to me, what Google did here may have been expensive, but I can see the logic behind it. They stop Motorola from extorting the other Android device makers. They move Motorola's devices from 'suck' to 'decent'. They strengthen their own patent portfolio in the Intellectual Property Legal Wars. Then they sell off Motorola so that it's clear they won't screw the other Android vendors to strengthen the brand they own.
Re: ouch! (Score:5, Informative)
1) did say in their internal documents that they intend to use software-patents as a way to "add a cost" to open source software especially Linux and anything based on Linux.
2) Microsoft funds, and arranges for funding through Baystar Capital and RBC Canada for SCO's failed legal assault on Linux.
2) Microsoft signs "Linux Patent License" deal with Novell and Xandros. Claiming it's all in the name of "interoperability"
3) Later Microsoft CEO Steve Balmer claims (without proof) that Linux violates 235 Microsoft software-patents.
4) Microsoft begins extracting a "Linux License" tax from device vendors such as Nas Maker Buffalo and some printer manufacurers and other device manufacturers.
5) Android comes on the scene. Microsoft widens their "Linux License" program to include Android. However they still collect on a "Linux License" for servers from Amdocs and Amazon among many others.
Microsoft is basically implementing what they always planned to do. Use trivial and obvious software-patents to destroy FOSS in the marketplace. The patent welfare is just a beneficial side-effect and i'm sure it helped to pad their most recent record earnings.
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still seems like an aweful lot of cost and effort fighting a battle they can't possibly win... it's tough keeping stockholders happy i guess
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Depends depends. People scoffed at buying Youtube but that seems to have worked out alright. There's a (slightly breathless) but interesting take on what Nest might be for here:
http://www.theregister.co.uk/2... [theregister.co.uk]
ie it's about the server tech for running appliances.
Re:ouch! (Score:5, Insightful)
They didn't "rent" anything -- they paid $10 billion for Motorola's patents. The rest wasn't worth much to them.
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That is an interesting point. Anyone have an idea of how many patents Google was able to buy originally?
Re:ouch! (Score:5, Informative)
Yes, spot on.
17,000 patents, plus another 7,500 pending. Also, the patents were higher quality patents, so it just was not the numbers.
http://en.wikipedia.org/wiki/M... [wikipedia.org]
Re:ouch! (Score:5, Interesting)
Actually, owning Moto put them in an uncomfortable situation with the other Android phone makers.
If Google doesn't make hardware phones, there's less incentive to go fork your own android.
So they paid 10 billions for patents, give Moto to someone who can both invest in it and leverage the Chinese market, and avoid a war with their customers.
Decent deal.
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and avoid a war with their customers.
Exactly. Nail hit squarely on the head.
Samsung leaked a Tizen phone [digitaltrends.com] just to get Google's attention.
Google extracted a patent deal in exchange [techcrunch.com] for getting out of the hardware deal, and now they complete their end of the bargain.
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Except that the reason Google wanted the patents was to protect Android and Android device manufacturers from patent litigation, and to fight back against it where possible. Samsung wanted the benefit of that protection so did the deal with Google to cement it.
Leaking plans for a single phone powered by another OS that is only just staring out in China isn't exactly making Google quake in it's boots.
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Agreed, the patents are important. Both to Google and Samsung.
As for Tizen only starting in China, Samsung has yet to confirm that, but If I were Google, and the single biggest handset manufacturer in the world showed a breakaway device, I'd take notice, If anyone could pull it off, Samsung could.
Its all guesswork of course. But if Tizen suddenly takes a few more years to appear, ore quietly dies, I would not be very surprised.
Re:ouch! (Score:5, Informative)
Its actually the other way around. Google is keeping all but 2000 patents (some sources indicate over 10K) and licensing them to Lenovo, and no doubt cross licensing those 2000 back from them.
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Original purchase: $12.5B
Motorola's cash on hand from purchase: $2.9B (don't know much went with the sale, though...but definitely less than $2.91B)
Sale of Motorola Home: $2.35B
Sale of Motorola Mobility: $2.91B
Tax losses from Motorola: I don't know how much
So we're talking about a total cost of at most $4.34B for however many patents they're left with. And of course, there's all the invisib
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Forbes pretty much agrees with that analysis, and they valued the Tax write off for Moto losses to have been worth one billion out of the gate, plus 700million yearly. http://www.forbes.com/sites/ti... [forbes.com]
Then there was the sale of 2 Moto fabs in the far east.
See also http://www.androidcentral.com/... [androidcentral.com]
It will be interesting to see how much of the State Side assembly and shipping stays here. The advantages of having Chinese labor has been falling yearly, and Lenovo may just decide to build boards over seas and
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They didn't "rent" anything -- they paid $10 billion for Motorola's patents.
Actually, other reporting [chinadaily.com.cn] on the issue suggests that over 10,000 out of the 17,000 or so patents are part of the deal too. Larry Page said in his post that they'll be "retaining" the "vast majority" of the patents, but I'm seeing it suggested elsewhere that that may be intended to mean "retaining a license to", rather than "retaining ownership of". Alternatively, maybe it's Google getting the lion's share of the patents, with Lenovo taking the smaller portion and the reporting being a bit off. Either way, i
Re:ouch! (Score:5, Informative)
They didn't "rent" anything -- they paid $10 billion for Motorola's patents. The rest wasn't worth much to them.
According to this Google+ post [google.com], it wasn't that bad. Motorola came to Google with $5.6B in cash and deferred tax assets, plus Google recovered some more of their money by selling the set-top box business ($2.35) and some factories ($75M), and finally the sale price to Lenovo ($2.91B).
So the net cost was about $1.56B. For that Google got most of the Motorola patents and Motorola's advanced products group. Good deal? Bad deal? You decide.
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Google seems willing to pay 10B to rent companies for a while...
No, they paid $10 billion for most of motorola's patents. If you read the full article you would know that they are not selling them on to Lenovo with the rest of the company. That is still expensive based on how much everyone else paid for the Rockstar patents though: http://en.wikipedia.org/wiki/R... [wikipedia.org]
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You guys aren't getting it. Google only sold the phone division of Motorola. They keep the engineers and patents that came with the deal, and are licensing those patents to Lenovo. They only bought Motorola to have a MAD patent portfolio.
They bought a company for the part they wanted and sold the parts they didn't want.
Re:ouch! (Score:5, Informative)
Not really. They sold various other parts in the past for cash, and got tax writeoffs. Forbes estimates it only really cost them 1.5 billion in cash. With this deal they made money, and likely kept the patents.
http://www.forbes.com/sites/ti... [forbes.com]
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That's gonna leave a mark. A -$10 billion mark!
captcha: failure
Maybe not. According to Forbes [forbes.com] Google's net cost might have been as low as $1.5 billion, which means this might be a net gain.
TLDR: The sold off portions and the tax write-down may have made the out of pocket costs only 1.5B.
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They're keeping the patents though.
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Poor Motogoogle (Score:1)
That didn't take long...I wonder what Lenovo's plans are?
Google is keeping all the IP... (Score:4, Informative)
Considering the $4.5B that the Rockstar group paid for ~4000 mobile-related patents, and that Google is keeping the "Vast Majority" of the Motorola patents, the bulk of the price difference may well be in the IP.
A quick google didn't quickly give me a number for how many patents Google is keeping, but if Lenovo is getting about 2000 patents, and that is not the "Vast Majority", then there are a LOT of patents.
I gotta get me some more patents.
Re:Google is keeping all the IP... (Score:5, Insightful)
Given that Motorola (through the StarTac, DynaTac and MicroTac litterally INVENTED the mobile phone as we know it today, it makes sense that they would have a big patent portfolio.
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But Qualcomm has the key CDMA patents used for all digital phones (both IS-95 and GSM UMTS) and they're newer.
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I gotta get me some more patents.
If Thomas Edison were alive today, he wouldn't actually "invent" or "make" anything. He'd just write up and file patents.
A pile of patents worth $10 billion?
Yo.
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If Thomas Edison were alive today, he wouldn't actually "invent" or "make" anything. He'd just write up and file patents.
List of Edison patents. [wikipedia.org] All 1,093 of them.
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My head asplode.
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The original Motorola deal included 17,000 patents. Google says it's retaining the vast majority, but China Daily is reporting [chinadaily.com.cn] that Lenovo will be receiving 10,000 of them, suggesting that Google is merely retaining a license to those patents, rather than retaining ownership of them. If so, then that would limit their ability to use those 10,000 patents quite a bit.
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Agreed. That makes a lot more sense.
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A quick google...
I see what you did there.
Google shift in strategy, make others build better (Score:5, Interesting)
As much as they might say they are still building hardware - obviously not to the same degree.
Instead Google is focusing on making other hardware makers produce better Android devices, the evidence of which is the smack-down Google gave Samsung at CES [recode.net].
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the smack-down Google gave Samsung at CES.
I'm not sure there's enough information yet to know it was a smack-down. If part of the agreement was that Google has to sell Motorola, that would be quite a concession. And of course it may be that the agreement is for Google to adopt some or all of Samsung's UX design into Android. That would result in them shipping a standard Android distribution in future, without them actually changing anything.
I would give him a pass (Score:2)
I'm not going to complain about that because it happens to me more than I care to admit.
It takes a little more work but I think we can all parse what he was saying.
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If you're going to reply to something, can you make sure your reply isn't in a quote block?
No.
You're not trying very hard, are you?
Look
I
hate
you
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These kids with their money (Score:2)
First they overpay for Motorola Mobility. Now they're overpaying for Nest. Is Eric Schmidt still available to provide "adult supervision"?
At least this will even out their recent cash flow: $3.2B out for Nest, $2.9B in for Motorola. Well, almost - they're still down by a mere $300M.
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They paid $12.5B for Motorola and got $3.2B back, so that's $9.3B for patents. Is that the part that's a bargain?
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Except that the Motorola acquisition also included ~$5B in cash and tax incentives, plus the other parts that Google already sold, plus the other parts of Motorola they're still keeping.
I'm on the shitty mobile site, so sorry I can't be more specific. But check the other threads; some are estimating the patents cost as little as $1.5B.
Thank you. I couldn't remember how much cash Motorola had. I thought it was between $3-5 billion. Plus didn't Google sell the cable box group for a couple billion almost right away too? The entire deal was to pad their patent war-chest to defend Android anyhow
I have no idea what the actual value is, but they picked up 15,000+ patents in the deal. Which is pretty damn convenient. Especially since the Apple/Samsung patent shitfest started.
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"A billion here, a billion there, pretty soon it adds up to real money."
- Senator Everett Dirksen
WTF (Score:2, Funny)
Re:WTF (Score:5, Informative)
A great American company sold to China (Score:4, Insightful)
Re:A great American company sold to China (Score:5, Interesting)
Nope.
Motorola Solutions is still based in the Illinois, making top-tier wireless communications gear for commercial and public safety sectors.
All that has been sold to China is what used to be the Crappy Consumer Products/Race to the Bottom division of Motorola:
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Motorola has a distinguished history as a great American company.
If Motorola Mobility had a distinguished history of consistent profits, they would have never sold out to Google in the first place.
Silicon Valley (Score:2)
Silicon Valley sure knows how to rake in the cash hand over fist, but has absolutely no clue what to do with it once they have it.
That explains the Samsung deal (Score:5, Interesting)
Well, that nicely explains why Samsung announced that they were willing to work more closely with Google to make Samsung phones cohere to Google's direction with Android.
Wow. Major shopping spree (Score:5, Interesting)
That's a pretty big shopping spree Lenovo has been on. I sure hope it pays off for them -- I like their hardware, despite all the naysayers out there, I've never had problems with their stuff yet.
Yuck (Score:2, Funny)
Well, I guess that whole "built in USA" thing on the MotoX was a fluke.
and here I actually had a positive feeling about Google for a bit. Oh well.
This was always the point (Score:5, Insightful)
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Good for Android... not sure about Motorola (Score:4, Interesting)
Gotta say this is probably a better state for Android to be in from a "standard platform" point of view, a company making hardware and licencing its software to other hardware manufacturers hasn't work out very well in computing in the past. Either own the lot (Apple) or provide yourself as a service but don't compete (Microsoft pre-Surface). If you compete and licence, you end up being Apple during the clone years, or Palm. Companies might take a free ride on a crocodile, but they'll get off when they can cause it's not very safe...
Lenovo has done a decent job with Thinkpad, so it's not entirely doom for Moto either.
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I always suspected that Google would divest itself of Motorola, mostly for the reason you mention. In addition, I noticed that Google was operating Motorola as a completely separate business, not merging them with the rest of the company at all. That might have been to help maintain an arms' length distance to reassure other handset manufacturers, but I think it was mostly because they knew this day was coming. They just had to get Motorola back on track as a phone maker so they could sell it for a reasonab
Lenovo again? (Score:3, Funny)
Lenovo again? First you took my Thinkpad now my Moto X.
I guess the "Don't be Evil" Google is long dead. The principled stand of exiting from the Chinese market, followed by assembling the Moto X in the US, then selling Motorola to Lenovo? ? ? WTF, Google.
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Troll much?
Lenovo has ALWAYS made the Thinkpad, even when it was called the IBM Thinkpad.
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It is a big thing when the main beef people have is that "build quality dropped."
Lose $10 billion here, $10 billion there... (Score:2, Funny)
The big question (Score:2)
So I wonder why they're selling to Lenovo now. It's kind of odd when you come right down to it.
Lenovo spending spree (Score:2)
Lenovo expanding too quickly? (Score:2)
Need the cash for Lycos (Score:3)
Not too surprising (Score:2)
Google's main priority is the Android ecosystem. One attractive property of Android is the level-playing field (or at least one that is only reasonably bumpy rather than mountainous). Google's ownership of Mobility gave it patents that will probably be useful, and of course they aren't letting go of those, so what is sold is not what is bought. Google's ownership of one player can at least give the impression that Google will favour its own, or at least will tend to under commercial pressure. Letting M
Re:Ouch (Score:4, Insightful)
As I pointed out elsewhere, this isn't the only sale from that purchase. Look here
http://www.forbes.com/sites/ti... [forbes.com]
They already sold off parts of that 13 bn for 2 bn in cash and 15% stake in another company. This makes another 2 bn. They also got to keep the patents, and got massive tax writeoffs for years. They may have come out ahead on cash (depending on the tax writeoffs) and definitely ended up buying those patents for a few billion max.
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Or a G, for half that.
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You are a fool who doesn't understand what a tax writeoff is.