The hits just keep coming from the Google/Motorola deal. The $12.5 billion deal is now actually well past $13 billion in costs.

My favorite throw-away line from Claire Cain Miller’s New York Times piece:

In August, Google announced the layoffs and cuts as part of its broader plan to turn around Motorola Mobility, which has been unprofitable for 14 of the last 16 quarters.

For you non-math majors, 16 quarters is the last four years.

Google bought the Titanic. And they bought it when it was already underwater.

Remember when Google-owned Motorola went on the offensive against Apple a month and a half ago? Well, now they’re backing down. Though it’s not clear why.

Frederic Lardinois of TechCrunch:

We have asked Google for a comment about why it withdrew the complaint, but the company isn’t talking about the reasoning behind this move. Here is the brief statement we received from Google: “As we have said many times before, we will continue to vigorously defend our partners.”

Not only is that not an answer to the question, it seems to be an answer to a question not asked. Very strange.

Casey Johnson:

Motorola Atrix 4G owners will not get the Android 4.0 Ice Cream Sandwich update the company promised them, according to a newly revised upgrade chart. The phones will continue to run Android 2.3 Gingerbread, dealing another blow to the integrity of Google’s upgrade program.

This would be pathetic if Google didn’t own this company. But they do. So it’s dually jackassified.

Dieter Bohn last week on Google’s “New Motorola”:

But the simple fact remains: neither Google’s flagship Galaxy Nexus nor the new devices from its subsidiary Motorola are running Google’s latest software on Verizon’s network, and they won’t until Verizon says they can.

There’s nothing “new” about that.

If it weren’t for Verizon, I’d bet that basically no one would have bought any Motorola phones the past few years. And the company would have been even more of a money pit. And Google still probably would have paid over $10 billion for that money pit.

Brian X. Chen:

The new phones, the Droid Razr HD, the Razr M and the Razr Maxx HD, have a crucial component that reflects Motorola’s legacy as a radio company: the cellular modems inside them, which connect with newer, faster fourth-generation LTE networks, were made by Motorola.

I’m sorry, I couldn’t get past “Droid Razr HD, the Razr M and the Razr Maxx HD”. Who the fuck comes up with these names?

Wait, it’s actually even worse. They’re supposed to be in ALL CAPS:


Yes, Motorola has trademarked “MAXX”. Phew. I’m sure there were so many companies clamoring to use it in their branding. And they’re all condom companies. 

Google never uses their patents for offensive purposes. Except when they do.

This is the problem with these self-righteous stands. Time ends all promises, eventually. And the result is extreme hypocrisy even though you’re just doing what your rivals are doing.

Google is already trying to spin this as a defensive maneuver, but come on: it’s a new patent-infringement claim which Apple will have to defend against or risk an import ban of their devices. 

Yours truly, predicting this six months ago:

They also may find themselves suing Apple over patents and demanding a royalty for each iPhone sold.

The problem Google is likely to face is that if they aren’t agressive with the patents in the way that Motorola has been, how can they possibly hope to license them in the way they say they will? Who would license something when they don’t have to? This is a slippery slope. 

Bigger picture: after going on and on about the dubious patent tactics by rivals like Apple and Microsoft (and rightfully so in most cases), Google may find themselves in the same position thanks to this Motorola deal.

Matt Brian took at look at the SEC filing for Google’s big Motorola layoffs:

Ensuring employees are well compensated following the cuts, Google says it will provide “generous severance packages, as well as outplacement services to help the employees find new jobs.” All of this is expected to cost the company $275 million, which will be shown in Google’s third fiscal quarter, with further costs being realised by the end of the year.

So when I poked fun at the $12.5 billion price for a company that has lost money for four years in a row, I actually meant $12.775 billion. And rising?

Claire Cain Miller on Motorola cutting 20% of its work force:

One-third of the 4,000 jobs lost will be in the United States. The company plans to leave unprofitable markets, stop making low-end devices and focus on a few cellphones instead of dozens, said Dennis Woodside, Motorola’s new chief executive, in a rare interview.

Makes sense, because:

But Apple and Samsung won consumers’ hearts with the more exciting iPhone and Galaxy phones. Motorola Mobility — which split last year from Motorola Solutions, the division that makes devices like police radios — lost $233 million in its first six weeks under Google. The phone business has been unprofitable for 14 of the last 16 quarters.

That’s basically four straight years of losing money. This is a company that Google paid $12.5 billion for.

Yes, I’m sure it was always mainly about the patents, but Google nearly doubled its workforce with the deal and added quite a bit of red to their bottom line quarter after quarter. I bet these aren’t the only cuts we see. 

But it certainly sounds like Woodside and Regina Dugan, formerly of Darpa, are going about the reboot the right way. The most interesting aspect may be the employees who wear their self-enforced resignation dates — two years from now — on their name tags so they have a sense of urgency (an idea Dugan borrowed from Darpa).

As expected, most of the money paid, $5.5 billion, was for patents and IP. What’s curious is the $2.6 billion paid for “goodwill”. In other words, that’s the amount Google paid above what they considered the fair market value to be because they think the combination will be fruitful down the road.

If you’ve heard the term “goodwill” recently, it’s because that’s how Microsoft categorized their $6.2 billion aQuantive write-down. Microsoft ended up eating shit on all those billions because expected synergies didn’t exactly work out as planned. Okay, they didn’t work out at all. And remember, aQuantive was a successful, money-making company at the time Microsoft acquired them. Motorola? Not so much.

So far, it looks like Google’s billions acquired an asset that is dragging down their bottom line. Maybe that changes, maybe it doesn’t — it’s obviously too early to tell. But the recent history of Motorola certainly doesn’t look good. Right now, that sure looks like a very pricey $2.6 billion.

Google had a solid quarter, beating most estimates. But this is interesting:

Motorola Operating Loss – GAAP operating loss for Motorola was $233 million ($192 million for the mobile segment and $41 million for the home segment), or -19% of Motorola revenues in the second quarter of 2012. 

In other words, in their first quarter as a Google subsidiary, Motorola managed to lose more money than ever before. For some context, for the entire 2011 fiscal year, Motorola posted a loss of $285 million.

Need I remind you, this is a company that Google paid $12.5 billion for

Ina Fried:

Google is believed to also be open to a deal, but the two sides appear very far apart in the kind of deal they envision. Sources close to Microsoft say the company is interested only in the kind of deal that would see the balance of licensing revenue headed in its direction.

So Google (now the official owner of Motorola) is going to cut a deal with Microsoft to pay them a portion of each Android handset sale? Yeah… Don’t see that happening. But it would be pretty humorous.