Google Reveals How It Valued Motorola Before Acquiring It

Google surprised everyone last year when it decided to acquire Motorola last year, for around $12.4 billion. It was an unexpected move by the search giant, which would put it in direct competition with its own hardware partners as well as Apple, its arch nemesis in the mobile space.

Acquiring Motorola would also give Google the capability to produce its own hardware devices, and compete more effectively with the iPad in the smartphone and tablet markets.

At the time of the acquisition, it wasn’t exactly clear why Google acquired Motorola — whether it was for Motorola’s sizable patent portfolio which was hot property in those days as the patent wars loomed large, or for its hardware business, which would help Google “supercharge “its Android business, as Larry Page put it.

Today, Google outlined how exactly it valued Motorola when deciding to acquire it.

Of the $12.4 billion price tag, $5.5 billion was the value it attributed to Motorola’s patents and developed technology. $2.9 billion was attributable to the cash reserves of Motorola, while $2.6 billion was a goodwill expense, attributed primarily to the synergies Google expects to derive following the acquisition.

Of the balance, $730 million was assigned to existing customer relationships, while $670 million was for other net assets acquired.

Google completed the Motorola acquisition last quarter. Motorola contributed $1.25 billion to Google’s overall revenues, but depressed its margins with a $233 million operating loss.

via WSJ

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