Custom essays on The financial impact of Google’s acquisition of Motorola mobility.

The financial impact of Google’s acquisition of Motorola mobility.
To begin with, it should be noted that Google’s acquisition of handset manufacturer Motorola Mobility excited people all over the world, even those, who far from the world of digital technology. As a matter of fact, both companies can be considered as legends. In particular, Motorola has become famous during the World War II; in this period it supplied the army with field radios. In 1973 Motorola introduced the first prototype of a portable cellular phone DynaTac. After this success, Motorola became world leader in extremely perspective field of activity – mobile phones production. Motorola remained the largest producer of mobile phones until 1998, when it was overtook by the Finnish Nokia, and only nine years after it was ousted from the second position be the Koreans from Samsung. In turn, it can be said that the name Google has become synonymous of quality and fast Internet search. Google is the most popular (79.65%) search system, which handles 41 billion 345 million queries per month (market share 62.4%) and indexes more than 25 billion Web pages. Moreover, information can be found on 191 languages, according to Robert Hof (2011).
As a result of this acquisition, many people are interested, why Google needs a mobile phones producer Motorola? Many experts consider that with this acquisition Google will automatically become a competitor for the Army of its major customers – Samsung, HTC, Acer, Asus and other manufacturers of digital technology, which use in their smartphones and tablet Android operating system. With the aim to reassure them, Google immediately explained his action: it is all about the patents. It should be mentioned that currently, Microsoft and Apple are suing other manufacturers of smartphones over the patent royalties. According to experts, today, only from patents Microsoft gets more than $ 1 billion annually – it is significant amount of money, which exceeds Microsoft’s earns on the sales of their own operating system for smartphones – Windows Phone. After information about acquisition, Larry Page, Google CEO and co-founder wrote on his page in social networks that the purchase of Motorola Mobility patent portfolio will strengthen Google Android and will help Google to protect itself from non-competitive methods of struggle. To be more precise, it should be noted that, according to consulting company Frost & Sullivan, Motorola Mobility has about 24 500 patents, and if Google paid $12.5 billion, i.e. 510 204 dollars and eight cents for a patent. It is important to mention that not so long ago Google bought Novell, with each of its patent. As a result, Novell earned $ 450 million for the 882 patent, according to Christina Warren (2011).
In my opinion, all these shows that a patient wars in the IT sector will intensify, which considers significant division of spheres of influence in the IT sector. It is essential to note that the first step in this process made Microsoft, which has set the trend for big deals, when arranged the release of Nokia smartphones with Windows Phone platform. Further, in less than six months, Google announced the acquisition of the units of the former favorite of the mobile phone market – the U.S. Motorola Mobility for $ 12.5 billion. As a fact, this price is doubled, in comparison with the market value of the company on market trading on Friday, August 12. Recall, Motorola was among the first major manufacturers, which supported Android. The company, in which Google invested billions of dollars, in II quarter of the year showed a loss of $56 million in comparison with a profit of $ 80 million in II quarter of 2010. The company’s revenue totaled $3.3 billion, which is still better than analysts had expected – $3.12 billion, the company promised that the IV quarter will be much more productively. This year, Motorola, which can be called the founder of mobile phones, plans to present 4G LTE smartphone, and at least two new Android tablets. The company’s stock on news of the sale yesterday soared to 60,4% according to Bloomberg and even if the deal falls through, Google will pay Motorola $ 2,5 billion, however, Motorola will also pay a fine of $ 375 million, according to Leo King (2011).