The Internet has been buzzing this week about Google’s announced $12.5 billion acquisition of Motorola. Most analysts believe that the deal will eventually get regulatory approval and the two brands will come together under one company — Google. However, financial analysts are split on how they feel about the acquisition and how they think the acquisition will affect Google.
According to AdAge, on the pro Google-Motorola merger side, analysts cite the following positives:
- The acquisition of Motorola is happening as a result of patent battles between Apple, Microsoft and Google. Therefore, Google needs to protect and increase its own intellectual property. Motorola has a portfolio of 17,000 patents and 7,500 pending. The merger will protect Google’s Android ecosystem that includes 39 manufacturers and 231 carriers in 123 countries.
- The acquisition of Motorola better enables Google to compete in the mobile space where Google CEO Larry Page explained during an analyst call on August 15th web usage is increasingly moving towards. The acquisition gives Google a stronger position in the mobile market where they can distribute more Google products and services.
- The Motorola acquisition better positions Google to directly compete against Apple with their own device and marketplace
On the opposite side of the debate are analysts who cite the following negatives about the Google-Motorola merger:
- The acquisition is Google’s most expensive ever and will negatively affect Google’s stock and balance sheet. Standard & Poor’s already downgraded Google from “buy” to “sell” just two days after the acquisition was announced.
- The acquisition will alienate Google’s other handset partners, including HTC, Samsung and Sony who will likely look for new opportunities and options.
- There is no guarantee that the Motorola patent portfolio can protect Google from the patent battles its facing from Microsoft and Apple.
One thing is certain — the Google brand and company has been growing significantly with bumps in the road easily navigated along the way in recent years. It’s safe to assume that Google scrutinized this acquisition long and hard before the decision to pay $12.5 billion for Motorola was made. Will it be the right decision in the long-run? Only time will tell. What do you think? Leave a comment and share your thoughts on Google’s intended acquisition of Motorola.
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Susan Gunelius
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Even if one takes into account the thousands of added patents, I don’t think Google have made the right decision to effectively aliente themselves from HTC, Sony and Samsung. In order to justify the aforementioned action, they would have to become substantially more competitive (perhaps even dominant) to Apple, which I feel is very unlikely.