Aug

18

 One has found that when companies pay up like this it is the handwriting on the wall.

Anatoly Veltman comments: 

True. I wonder, in addition, if the new world order means that Gold also looked at that.

Mr. X. writes:

One notes that the target of this transaction was Motorola rather than a certain Canadian smartphone manufacturer who gained a certain personage's attention based on similarly superficial and glib generalizations.

One wonders what this personage's knee-jerk reaction to the deal would have been — had the CEO of the acquiror been a god-fearing male Democrat-leaning Yalie, over the age of 65, who cheats on his wife, plays golf on Sundays with government officials, and tennis on Tuesdays with other prominent financiers…. Might that have taken the writing off the wall?

Importantly, one notes that Bloomberg is reporting that the Google agreed to pay a shockingly high $2.5 Billion breakup fee if the deal doesn't close (an amount more than 6 times the typical amount). This is bizarre and hardly subtle — so the buyer is either an idiot or he knows something that we don't know. Before rushing to judgment, one is inclined to believe that there is more than meets the eye here — and some elucidation may be provided in the soon-to-be-filed merger proxy statement.

Dylan Distasio writes:

I think at the end of the day, when all is said and done, assuming this deal goes through, the price will appear to have been a bargain. Google has had phenomenal success with Android, and as a result is in the crosshairs of both Apple vis a vis their patent battle with HTC, and with Oracle who in typical Ellison fashion picked clean the bones of the once mighty Sun, and let loose the lawyers of war. Oracle is going after the core of Android by claiming infringment on their acquired Java portfolio. With 17,000 patents just added to the Google portfolio, give or take, a cross licensing agreement with either opponent is much more likely as a worse case scenario for Google, IMO.

Motorola, despite their tarnished reputation compared to their go go days, also brings a hardware design and manufacturing ability that Google is sorely lacking in house. They took a gamble on Android, and were there with the original Droid which with the help of Verizon's heavy advertising really did more than anything to bring Android to the forefront. Google will now be able to realize their vision of what a flagship Android phone should look like with more success than they had with the ill-fated Nexus launch. They will have the capability to leverage the hardware to the hilt with the guys and gals writing the drivers in house.

The one area they will have to be careful about is alienating other major Android players like HTC. HTC's CFO was towing the line so far this morning, welcoming the deal. Microsoft is going to be heavily courting the large players for the Windows 7 phone OS, so there will be at least one alternative available to other Android handset manufacturers. I'm relatively confident Google will tread lightly though, and at the end of the day, Android is now a relatively mature OS that is FREE to the other manufacturers.

Google had a large warchest of cash, and a smash in Android that needs to be protected. I think for once, the premium will be money well spent. The landscape of tech mergers and acquisitions is littered with disastrous decisions and lack of the ever evasive synergies. I'll go on record as saying, this time it will be different, assuming the deal is not derailed by the Feds.

Drinks are on me if this one doesn't pan out over the next few years.

Gary Rogan adds:

I can't imagine that Google will not sell or spin-off the hardware business or the mobile phone part of it and keep the patents. They got MULTIPLE Android makers mouth exactly the same party line today, and they either threatened them (unwise, and hard to achieve reliable results so quickly) or promised neutrality. Keeping the smart phone manufacturing is a sure-fire way to sow discord in the eclectic Android community which can't be worth it for them. All they need is the hardware slaves killing each other making more and more popular phones to keep the advertising dollars coming in.


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