In the aftermath of Google’s Motorola sale to Lenovo, some are immediately questioning the monetary loss. Did Google just cost themselves $9.5 billion? Fortunately, no. While there is likely an immediate short-term loss, the longer play could prove fruitful for Google.
When Google purchased Motorola, the final price was right at $12.5 billion. The quick math tells you that, after a nearly $3 billion sale to Lenovo, Google is left with a $9.5 billion punch in the teeth. In Google’s original purchase, they had $3 billion in cash on hand and $1 billion in tax credits. That brings the price at purchase — meaning that which counts against the books — to roughly $8.5 billion.
After a $3 billion sale to Lenovo, we’re right at $5.5 billion. Then we’ll remember that Google quickly sold the Motorola set-top box division to Arris for a cool $2.4 billion shortly after purchase. That leaves us at just over $3 billion, and this is where things get tricky.
Google believes the patents they kept from Motorola are worth about $5.5 billion. If that holds up, Google is actually benefitting to the tune of about $2.5 billion in this deal. The big caveat here is whether or not Google is overvaluing those patents. In 2013, a judge rules the patents were worth about $1.8 million annually in licensing. That’s a far cry from $5.5 billion, but also only one judgment -- and over time, they could prove more useful.
Whether or not Google loses financially is yet to actually be seen. Many analysts put the value of the patents Google kept at right around $4 billion, so if they had to actually write it down today, there would be a $1.5 billion loss on the books. Not desirable, but also not something that’s going to shut the doors at Google.