Google Wins Motorola Battle, But Shareholders May Lose The War (Update 1)
Professor Mark Lemley shared his views on Google's recent purchase of Motorola Mobility.
Google's(GOOG) success in snaring approval by regulators on its $12.5 billion purchase of Motorola Mobility(MMI) is an important battle victory in Silicon Valley, but industry analysts argue that it may point to a costly Cold War of attrition that will sap earnings power from the search- engine giant over the long term.
The unpredictability of Motorola Mobility's patents in future litigation, its projected dilution to Google's profit margins and overall acquisition size are cause for concern that the deal may be a major misstep for first year CEO Larry Page.
There is potential for significant licensing revenue for the 17,000-plus patents in Motorola Mobility's portfolio, but Google is unlikely to go after a monetization path that would make the deal an earnings boost. "I doubt Google wants to enforce the patents; what it hopes to do is use the threat of enforcing them to protect Android from the Microsoft and Apple suits," says Mark Lemley of Stanford Law School.