Google Motorola Acquisition

Google Motorola AcquisitionPresented by:Subatta sawantDeepti dubey Yashasvi tamoreMamta bangera Riddhi sawal Sharvani pawar

Flow of presentationOverview of both google and MotorolaPre-acquisition scenario of googlePre-acquisition scenario of Motorola Details of the deal Purchase considerationTerms and conditionPost acquisition scenarioSuggestion Conclusion Google Google is an American multinational corporation

Most of its profits are derived from AdWords

Google was founded by Larry Page and Sergey Brin

Google began in Jan 1996 as a research project by Larry Page and Sergey Brin

Google was incorporated on September 4th,1998

Google continued.. Together they own about 14 percent of its sharesAn initial public offering followed on August 19,2004 Its mission statement and its unofficial slogan In 2004,Google moved to its new headquarters in Mountain View, CaliforniaGoogle began as an online search firm Desktop products include The company leads the development of the Android and the browser-only chrome OS

Motorola IncMotorola Inc was a multinational telecommunication companyAfter having lost $4.3 billion from 2007 to 2009 , it got divided into independent companies on January 4 2011

Motorola MobilityMotorola mobility is an American mobile device subsidiary of the Chinese multinational computer technology company LenovoThe company was formed on January 4,2011Motorola mobility took the companys consumer-oriented product lines The company primarily manufactures smartphones6Pre acquisition scenario

INCOME STATEMENTIn Millions of USD (except for per share items) 31-12-201131-12-201031-12-2009Revenue13,064.0011,460.0011,050.00Other Revenue, Total---Total Revenue13,064.0011,460.0011,050.00Cost of Revenue, Total9,747.008,495.008,897.00Gross Profit3,317.002,965.002,153.00Selling/General/Admin. Expenses, Total1,745.001,592.001,486.00Research & Development1,526.001,479.001,591.00Depreciation/Amortization595557Interest Expense(Income) - Net Operating---Unusual Expense (Income)132-227241Other Operating Expenses, Total---Total Operating Expense13,209.0011,394.0012,272.00Operating Income-14566-1,222.00Interest Income(Expense), Net Non-Operating---Gain (Loss) on Sale of Assets---33Other, Net3117Income Before Tax-148-4-1,335.00Income After Tax-249-79-1,335.00Minority Interest0-7-7Equity In Affiliates---Net Income Before Extra. Items-249-86-1,342.00What happened to Motorola?2007: Handset division suffered a loss of U.S$1.2 billion.

2008: Laid off 3,500 workers & 4,000 job cuts. Company's handset division was also put on offer for sale.

2009: Global market share had declined; from 18.4% of the market in 2007 by just 6.0%

2011:Motorola Inc. was split into two publicly traded companies, Motorola Solutions &Motorola Mobility. Motorola Mobility was spun off into an independent company

Pre-Acquisition performance of GoogleWhy did Google Acquire Motorola Mobility?Google needed Motorola Mobility Patent Portfolio.

Google and Motorola Mobility together will acceleration innovation and choice in Mobile computing

Google with the help of its Android and Motorola Mobile Device could compete with HTC, Samsung, Apple and other Mobile companies

Google will get the chance to enter into set- top Box Business.

Google's interest in using Motorola's patent portfolio as a defensive measure against an increasingly-litigious Apple.Deal

The DealOn 1st Aug 2011 Google made its first offer and on 9th Aug it made its second offer to Motorola Mobility both were rejected.

On 15th Aug both the firms agreed to a price of $ 40 per share, a 63 percent premium on current value of shares.

This brought the total price of the deal to $12.5 billion.

The deal was completed on 22nd may 2012.Break up of $12.5 billion$ 5.5 billion Patents And Developed Technology$2.6 billion Goodwill$730 million Customer Relationships$670 million Other Assets$ 3 billion CashPost deal considerations Motorola Mobility had 17000 patents with 7500 applications pending so GOOGLE expected total of 24500 patents.

This acquisition would strengthen the ties between hardware and software.

The expectations of GOOGLE were :-To protect and advance Android ecosystem.To enhance competition in mobile computing.Android will remain open and Motorola Mobility will be run as a separate business. OTHER TERMS AND CONDITIONSThe parties to the proposed transaction have a combined aggregate world-wide turnover of more than EUR 5 000 million.

The transaction will bring together two complementary businesses and does not give rise to any horizontally or vertically affected markets.

The Commission concludes that Google controls Android and all of the market share corresponding to Android should be attributed to Google.

It appears from the market investigation that other existing mobile OSs currently under development would provide roughly equivalent features or characteristics to those of Android.Post-Acquisition scenario

Products introduced

Motorola never made Google any money.Expenses of Motorola mobility under Google's ownershipOther expenses2012 (in milliondollars)2013 (in million dollars)research and development 474702sales and marketing524678general administrative236319Post acquisition changes in companiesMotorola Mobility's CEOSanjay Jhawas replaced byDennis Woodside, a former Senior Vice President at Google.Impact of acquisition on the stocks of the companies.Elimination of 4000 employees.Sold off home segment in December 2012.Close down of manufacturing units.Licensees started hedging their bets.

Googles final move Entered in an agreement with Lenovo on January 29th 2014.Sold for $2.9 billion.Continued to hold vast patents portfolio of Motorola mobility.

SUGGESTIONSGoogle acquired Motorola at $12.5 billion and sold it to Lenovo at $2.9 billion.

The Motorola purchase hurt Googles relationship with Samsung.

Motorola pilled up losses throughout Googles ownership. CONCLUSIONThe deal was one of this eras most influential event in the tech industries.It was a bold move.The 2 factors behind this deal was:- Googles envy on Apple It also wanted to get its hands on Motorolas deep patent portfolio.