Comments on: Google Q4 – Blot on the landscape

By: tatilsever

tatilsever — Thu, 24 Jan 2013 18:00:45 +0000

Certainly. I am not as upbeat about Microsoft’s future as you seem to be, but otherwise, it is difficult to argue against your bullet points.

If Google could articulate a vision for what it wants to accomplish by owning a handset maker, shareholders should not complain that Google may have overpaid a little. It is not like there are many other handset makers that were available for purchase, especially if geographical proximity is a concern. Unfortunately, it looks like Google simply overpaid for a patent portfolio, after making fun of the price paid for Nortel’s patents, without a strategic plan in mind. This looks like a write-off waiting to happen.

By: windsorr

windsorr — Thu, 24 Jan 2013 11:37:52 +0000

I think you are stregnthening my argument that this was a disasterous acquisition that has delivered nothing but pain for shareholders,

By: tatilsever

tatilsever — Wed, 23 Jan 2013 17:43:30 +0000

Actually, if you take GAAP numbers, so that many one time charges are not excluded just because it does not reflect well on the company, Motorola Home has a $353 million loss, bringing the full year loss to over $1 billion. If you add that to $12.5 billion cash purchase and subtract $2.35 billion (not all of it in cash) it is supposedly earning from selling the Home unit, we end up with $11.2 billion overall spending on Motorola. Some of those Motorola losses become tax deductions (at 18% effective tax rate), but in the end that is probably still a little more than how much it would have earned (as net income) in all of 2012 without Motorola and substantially more than what it has earned in 2011.

During the sale, may news sites mentioned $3 billion cash Motorola was carrying and subtracted that amount from $12.5 billion price to get the supposedly effective price, but I don’t think such a simple subtraction makes much sense as Motorola had liabilities that could easily take out a good chunk of that cash over and above the non-cash assets. That might be why Google did not argue that point.