Google is paying $12.5 billion in cash to land Motorola Mobility. What exactly is it getting for all that cash?
Well, there are patents. Lots and lots of patents — 24,500 to be precise. Those will be useful for protecting Android from lawsuits brought by Apple and Microsoft.
Other than the patents … Google is getting an old school manufacturing business that has really crappy margins. Google earns almost as much in profit on a quarterly basis as Motorola generates in revenue. Below you can see the tepid sales growth from Motorola and the equally weak operating income.
This is the business Google will own, if the deal is approved. It’s a whole new world for Google, and it could be a disaster.