Skip to main content

Market Overview

Google's Loss On Motorola Isn't As Bad As It Seems...Here's Why

Google's Loss On Motorola Isn't As Bad As It Seems...Here's Why

After purchasing Motorola for $12.5 billion in 2012, Google (NASDAQ: GOOG) announced Wednesday it will sell the division for $2.91 billion to Lenovo (OTC: LNVGY).

Despite what appears to be a $9.5 billion loss, Michael J. De La Merced of New York Time's DealBook wrote that Google “did not do so bad.”

How is this possible? Using some simple accounting techniques, Google “technically” paid much less than $12.5 billion for Motorola.

When Motorola was initially acquired it had $3 billion in cash on hand in addition to $1 billion in tax credits, technically lowering the original deal to $8.5 billion.

Google later on sold Motorola's set-top box business to Arris for around $2.4 billion. As this was cash related to the initial Motorola acquisition, this lowers the effective acquisition price to around $6.1 billion.

Effectively, Google paid $6.1 billion for Motorola and has sold the division for $2.9 billion, translating to a $3.2 billion loss, which doesn't sound as bad the originally $9.5 billion loss that many investors fixated on.

But wait, there's more.

In a regulatory filing in 2012, Google valued its Motorola's overall “patents and developed technology” at about $5.5 billion. Under the terms of the deal announced on Wednesday, Google will retain ownership of the majority of the patents.

Once all this is said and done, did Google really commit what Time described as a “gargantuan mistake only Google could afford to make?”


Related Articles (LNVGY)

View Comments and Join the Discussion!

Posted-In: Deal Book Google Lenovo Michael J. De La MercedM&A News Tech Media Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at