Google Says Motorola's Patents Worth Less than Half of Mobility's Purchase Price

When Google purchased Motorola Mobility, there were many who thought the Internet giant would be able to turn the purchase into a cash cow. Google certainly laid out a great deal of cash in order to acquire Motorola mobility, with new documents showing the takeover cost $12.4 billion. What might be troubling for investors is just how little of that massive sum of money actually went towards acquiring patents and technology compared to buying “goodwill” and maintaining good customer relationships.

The newest financial releases by Google show that just $5.5 billion of the purchase price accounted for Motorola’s patents and technology. Of the remaining money, $2.9 billion was used for Motorola’s cash, $730 million went to foster customer relationships and $670 million was applied to other assets. The final $2.6 billion went to goodwill and the company’s value over and beyond the company’s value. The fact that Google overpaid by about $7 billion for Motorola’s patents means one of two things. Either Google is seeing a value to that technology that will eventually be more than what it is currently valued or that Google simply massively overpaid. 

There is a third option that could either anger investors or increase their trust in the company. It is possible Google simply didn’t want any other company to have the patents for various reasons. Plenty of companies over the years have spent more than they needed to in order to keep secrets out of their competitor’s hands.

If Motorola’s patents are worth as much as Google is currently claiming they are, it is a safe bet that Motorola wasn’t using them to their full potential, given that the company posted a $233 million operating loss last year. For its part, Google has not been exactly forthcoming about what it plans to do with the patents and technology it acquired, but company spokespeople have said that they will be providing more details in the near future. Google has also said that despite owning the Mobility patents, it plans on keeping Motorola as a separate company. Whether or not that ends up being the right decision will be determined later.

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