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Google and Motorola: (One of) the biggest destructions of shareholder value in history

If the reports are true (and Matthew Panzerino certainly thinks they are) then it looks like Google is selling off Motorola Mobility to Lenovo for a bargain-basement $3bn. This would represent a loss of around $9bn in a little over two years. (Update: It’s official.)

Except there’s more money been flushed down the toilet than just the loss on the deal. There’s also around $1.5bn of losses, plus probably hundreds of millions of dollars of legal fees which have spent chasing Apple around patent courts – to absolutely no effect.

The entire farce has cost Google somewhere in the region of $11bn, even once it’s managed to get $3bn back from Lenovo, which is desperate for a brand it can use to crack the American market.

This would eclipse the $10.2bn deal (and $8.8bn write down) for Autonomy done by those masters of a poor acquisition, HP.

Imagine, for one second, Tim Cook making a huge acquisition and, two years later, taking a $10bn bath on it. How loud would be the calls for him to be fired? Will there be similar calls for Larry Page to step down? Not a chance.

Update: Here’s another way of looking at it. Google sells Motorola Mobility for $3bn, after selling Motorola Home to Arris for $2.35bn. Assuming that Google is holding on to all the patents, and that its valuation of $5.5bn is correct (highly unlikely), that all comes to $10.85bn – a loss of around $2bn on the price it originally paid. Add in losses and so on, and you’re probably talking about a $4bn loss. That’s not quite the $6.2bn write-off that was Microsoft’s acquisition of aQuantive, but it’s not far off.

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  • http://www.jphotog.com Hrunga Zmuda

    Shoot, there’s yammering about Tim Cook’s ineptitude after they just had a record quarter! With flat projections for the standard post-holiday quarter, no doubt they’ll be whining about Apple not increasing sales over the previous quarter.

    What else could it be but willful ignorance?

  • http://www.cameronwall.com.au/ Cameron Wall

    Maybe they are retaining the patents…they would be well worth $11Bn, makes sense to me.

  • narcogen

    One way to look at it would be that the value was destroyed when Motorola put those assets up for sale– not when Google realized years later that they had overpaid for them.

  • http://blog.nicholasmodesto.com/ DigitizedSociety

    What you mean the iPhone only had 7% growth and not15-17% growth!?!? Fire Tim Cook!!