Case Study Analysis ?Google’s Motorola Acquisition

– Read the predicament examine & underline the vast counsel and then Truth SWOT Analysis- Analysis the predicament examine via:a) Describe the general residence of the Organization: ocean substance & conclusionsb) Describe the restraintthhence residence of the Organization : precious resolutions & selecting the best resolution( conclusion making ) – truth treatment concepts.Predicament Examine u201cGoogle’s Motorola Wages.pdf
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Google’s Motorola Wages:
A Predicament Examine
Ashish Varma
The Genesis
ranks in the smartphsingle interval.
OnAugust 15, Google (GOOG) announced an compact
to secure Motorola Mobility (MMI), domiciled in
Libertyville, Illinois, restraint $40 per divide or a well of environing
$12.5 billion, a douceur of 63% to the closing compensation of
Motorola Mobility divides on Friday, August 12, 2011.
The occurrence was unanimously accepted by the
boards of directors of twain companies. The chaffer was referable
easy. It besidesk Google suggestive endeavor to obtain
regulatory acclaims extinguishedparty stipulations. This is a
Vertical Merger (which companies at contrariant places in a
chain of products adhere coincidently). Here, Hardware Client
(Motorola) is secured by the Software Client (Google).
The Motorola wages equates to a third of Google’s
coin et. Motorola of-late reputed an $86 favorite
allure waste restraint the primitive region, bisectially excellent than its waste
restraint the selfselfselfsame age latest year. Well influenceset shipments
sunk from 9.3 favorite aces to 8.9 favorite aces. The
silver plaster is that smartphsingle shipments augmentationd to
5.1 favorite from latest year’s 4.1 favorite aces. Obviously,
Google looks holdd haughty germinative in the smartphone
market.
Google’s Android exempt method has of-late end
under spirit in an perseverance-wide indisputable action, in which
Android compositionrs HTC, Motorola, and Samsung
enjoy been sued restraint entireeged indisputable disturbance, by
Microsoft, Oracle and Apple. The Motorola Mobility
wages is considered a media of compensating the
viability of Android. Google has certain that it secure hurry
Motorola as an recalcitrant assembly. On November 17,
2011, Motorola announced that its divideholders voted in
favor of the assembly’s wages by Google Inc. restraint
$12.5 billion, receiving acclaim from the Aceed States
Department of Soundice and the EU on February 13, 2012.
The chaffer accepted succeeding acclaim from Chinese
authorities and was completed on May 22, 2012
Why scan Motorola Mobility?
Investors are wondering how an interallure hercules enjoy
Google can sum with and hurry a hardware assembly
that has been bleeding coin balance the latest scant regions. A
quick tally is that Google can comstanding hardware in
comprehensive quantities. Motorola was uninterruptedly a senior variable
manufacturer. Its Motorola Razr pattern sold aid than
100 favorite aces. Looking at OEM bargain divide axioms,
Motorola holds a bargain divide of 13.7%. This is down
from the preceding year’s divide of 20%. The assembly later
decided to comstanding phones on the Android platform,
which saw potent bargain entertainment domiciled on its reviews.
Therefore, Motorola has a hostile luck to propose up the
61
Indisputable is sound single of those cannonade merits of
Motorola’s wages. The wages of Motorola
solidifies Google’s standing in the throng of its intellectual
peculiarity actions. Google external 24,500 indisputables to its
growing portfolio.
Motorola Mobility has a desire truth of novelty in
communications technology and the crop of
intellectual peculiarity.
Its divers perseverance milestones conceive the induction of
the globe’s primitive movable cell phsingle seally 30 years since,
and the StarTAC?the slenderest and lightest phsingle in the
globe when it was fired.
On the other bisecty, this as-well strengthens the standing of
Android as a variable platform. The platform was in
56.1% of entire smartphones sold in the primitive region this
year. It beats Apple’s iOS, which represents 36.4% of the
worldwide smartphsingle bargain. Nokia’s (NOK)
Symbian exempt method has a bargain divide of 27%.
Meanwhile, Research In Motion’s (RIMM) bargain
divide has sunk to a unforced 13%.
The sluggard is Microsoft, which corners uniquely 2.6% of the
worldwide smartphsingle bargain. This bear secure enjoyly
hold in the neighboring restraintthhence as Android holds a potent
competitive standing in theAsia Pacific phsingle bargain.
Motorola Mobility’s liberal commitment to the Android
exempt method media there is a probable accord stakeween
twain the companies.
·
Motorola Mobility was a founding limb of
the Public Influenceset Entireiance, a consortium of 84
Volume 3 ? No. 2 ? July-December 2012
firms to open public standards restraint variable
devices
·
Motorola Mobility in 2008 made a gigantic schoose on
Android as the unique exempt method restraint entire its
smartphsingle cognizances.
The Rivalry perspective
Variable computing is haughtyly competitive. Google, Apple,
Microsoft, Research in Motion and Nokia entire effect
smartphsingle exempt methods. Apple, RIM and Nokia
as-well effect their possess cognizances, in conjunction to a estimate of
other comprehensive compositionrs. Microsoft and Nokia as-well
enjoy a very fast and haughtyly-integrated firm.
!
!
Android generally is the most enjoyd public-source
option restraint variable computing. Faster novelty and
potent indisputable security are cheerful restraint the well
Android ecosystem.
Since the primitive Android phsingle fired in October
2008, Android cognizances enjoy injected rivalry
into variable computing, giving consumers,
applications openers and variable carriers haughtyquality preciouss to products enjoy Apple’s iPhone
and iPad and RIM’s BlackBerry.
!
Diversity and precious are explanation to a hearty perseverance.
With rivalry, consumers secure staketer variable
devices at inferior compensations.
!
Google nonproductions to permit as divers influenceset effectrs
as approvely to truth Android becatruth Android accelerations
variable truthrs secure online. And online advertising is
Google’s centre employment.
o
Google has no inducement to seal impromptu
Android to other hardware
manufacturers, limiting itself the fashion
Apple and Research in Motion enjoy.
o
The Android ecomethod depends on a
range of compositionrs and software
developers adding their noveltys to
Android. Cutting that impromptu would be poorly
forAndroid.
Google has certain in a harass disengage that Motorola secure
stand as a unconnected employment. This addresses concerns that
it secure no desireer reocean as an public fount variable
platform. Motorola secure reocean a licenlook of the Android
platform and Google secure be spending aid span
Volume 3 ? No. 2 ? July-December 2012
developing staketer Motorola patterns to subserve the changing
Android ecosystem. According to Google, it is environing
innovation, rather than a savory propose on their bisect to
secure Motorola.
The Inorganic Augmentation Scenario
·
Margins refuse restraint the end of restraintthhence augmentation
The propose to acceleration Motorola secure enjoy an impression on the
margins. Senior phsingle compositionrs enjoy rawboned rooms.
The consume to consequence a smartphsingle ranges from $150 to
$200 per ace. Conversely, restraint bargain leaders enjoy Apple
and Samsung, they could amply oceantain a room of
40% to 50%. The challengers are restraintced to acceleration a
portion of the consume to entice odd clients to switch to their
phones. The expectations are rooms secure be rawboned restraint
Motorola going restraintward.
This is referable a apex to be balancely restless environing, tranquil.
Google has oceantained integralure proaccord rooms of 25% balance
the latest five years. A unsuppressed selfreliance would be a
100 to 150 deduce apex impression on availability. This
appears to be insuggestive referring-to to the beneaccord it secure
surrender Google balance the desire hurry.
Valutions Perspective
At introduce, Google is trading at 13 spans 2012 rights.
This is inferior than its five-year middle rights multiple
of 19 spans. The accumulation employments at 10 spans rights. These
valuations do referable soundify the economic prospects of
Google and its superiority in the bargain it operates. In
fact, the bargain is discounting contempt rights augmentation in
the restraintthcoming.
In opposition, Apple employments at 12 spans rights. It is in a
standing correspondent to that of Google. The bargain is
discounting sinferior augmentation in the hence years. Other
peers enjoy Baidu (BIDU), employment at 36 spans rights.
Yahoo! (YHOO) employments at 17 spans rights. These
companies abstract to Google, not attributable attributable attributable attributable attributablewithstanding the bargain has treasured
them excellent.
It is besides coming to tell that this wages secure consequence
handsome avail restraint Google. Google’s vestige chronicles on
acquisitions has been referring-toly cheerful. The Motorola
wages secure enjoy a gigantic impression in the hence years. It
is impregnable to affect that Google has gsingle entire in on this chaffer.
1. The Real Need of this chaffer:
Motorola pioneered the ‘flip phone’ with the
MicroTAC and the ‘clam phone’ with the StarTACin
62
the mid-1990s.[23] The RAZR pattern gave it humongous
success, except with the emergence of other players, it obsolete
suggestive bargain divide in the mid-2000s.
Though the assembly earned $100 favorite during the
fourth region of 2007, its influenceset opposition obsolete $1.2
billion at the selfselfselfsame span. Numerous explanation executives went
on to adhere the rivals and the website Trusted Reviews
called its products repetitive. Aid, 3500 employees
were made to license the assembly in January 2008,
followed by 4000 in June.
Finally, a setback restraint it was the abdication of gigantic
estimate of executives uniquely to adhereApple Inc’s iPhone.
Motorola struggled and the uninterruptedly no. 2 cellphsingle effectr
th
now ranked 8 .
Motorola’s influenceset opposition then had to be put on sale.
ads, which amounted to $38 billion latest year.
This chaffer with Motorola has proved to be the icing on the
cake as Motorola Mobility Trades booked $13.1
billion in fruits during its decisive year as an recalcitrant
company. [8]
Other byproduct favors are:

Delivery of extra services, restraint in,
advertising to maintenance rooms through Motorola’s
cable TV boxes

Open the direct origination cognizance restraint variable
computing

Compete with Microsoft’s uphence Window’s
phone.

Smartphsingle designs to drift government’s and
companies’ needs.
The assembly’s global bargain divide sunk from 18.4%
in 2007 to 6.0% in the primitive region of 2009.
To its libetrounce came Google- which had antecedent bought
Android Inc. – the opener of the haughtyly demanded
Android exempt method, truthd by half of the smart
phones in the Aceed States ofAmerica.
In a proposition, Google said the chaffer was aimed at
acquiring Motorola’s indisputable portfolio, which it said,
would acceleration it protect Android balance allowable threats from
competitors armed with their possess indisputables. [7]
Google’s impel to open into hardware employment led to the
most costly and destroyiest wages in its 14-year
history. It secure qualify Google to enjoy aid administer balance
how Android is being truthd on movable or variable
handsets. As-well it artifices to be a refractory emulator restraint
Apple’s iPad andAmazon.com’s Peelle Spirit.
This chaffer gave Google arrival to a well base of 17000
cellphsingle indisputables and now, aid it is bringing in aid
ambitious artifices restraint the oddly secured employment.
2. The impression of this Chaffer
Google and Motorola Mobility coincidently secure accelerate
novelty and precious in variable computing. Consumers
secure secure staketer phones at inferior compensations owing:Google is
vast at software; Motorola Mobility is vast at cognizances.
[12]
Latest year, the online advertising at Google’s American
region accounted restraint $17.5 billion of Google’s fruitss.
In wellity, 96 percent of fruitss of Google end from
63
With an augmentation from 46.9% of the Globe Bargain restraint
Smartphones in Q1 2012 to environing 68.1%, it lookms the
Google Motorola chaffer is doing aid cheerful than poorly.
Tranquil it is as-well of avail that Samsung
contributed to 44% of that consummation.
Arguably, the Google Motorola chaffer was entered to surrender a
refractory rivalry to twain Samsung and Apple in the
hardware employment and single of the consummate deduces of
getting into the chaffer was the potent foothold ofApple. It is
well knpossess that Steve Jobs deduceing the folks balance at
Android were sound a throng of thieves.
Google constantly nonproductioned to be where Apple is today. Hence
the consummate deduce restraint this wages, too the indisputable
and toll favors, was to choose a bite impromptu the Apple Bargain
share. That is what we nucleus on in this exception.
Did Google Motorola merger choose a bite impromptu the
Apple?
Volume 3 ? No. 2 ? July-December 2012
augmentation indicating potent bargain influence. Tranquil with
the Apple iPhsingle to be fired before-long, it provides support
restraint the divide compensation as Apple’s balanceentire bargain point
continues to mollify at a haughty trounce.
http://www.bbc.co.uk/
Indeed Apple has end a desire fashion since 1997 when its
shares employmentd at $3.19 and it was neighboringing closing.
Apple’s bargain point today is vaster than the combined
bargain points of IBM (IBM), Microsoft (MSFT), HewlettPackard (HPQ) and Dell (DELL) with environing $40 billion
in bargain point to thin.
From May 3, 2010 through August 1, 2012, Apple’s
cumulative EPS augmentation has extinguishedgrpossess the cumulative
divide compensation notion. This disconnection is expected to widen
balance the direct twelve months. Apple is slowly
transforming into a aid unsuppressed and a rather unmistakable
cannonade precious with divideholders lookking a compound of
augmentation and inend from their cannonade preciouss.
http://www.seekingalpha.com/
Hence, the Apple loyacatalogue are clcoming referable fazed by the
Google Motorola merger and as apexed extinguished antecedent, with
the propel of the iPhsingle 5 expected this region, Apple
should reobtain whatever trivial institution it has obsolete in the
Smartphsingle bargain and fir itself as single of the most
valuable companies on Earth.
Impression on other Vendors
What this chaffer has nevertheless dsingle is made unmistakable a
possibility of another choosebalance referring-toly before-long. With twain
Nokia and Microsoft suitably losing bargain divide
and twain trade on to a gigantic catalogue of indisputables, Nokia is
undoubtedly a potent solicitor of a choosebalance in the years
to end. Microsoft on the other influence agency look itself
being pushed extinguished of the variable vendor employment regular it
can remarkably incline environing things and acceleration single of its
hardware bisectners.
http://www.seekingalpha.com/
Other Android operators such as HTC, LG are referring-toly
wary. They enjoy realised that a chance of the innovative
changes that occur in the Android Eco Method agency be
primitive permit extinguished to Motorola. Tranquil Google oceantains that
it secure in the restraintthhence besides hold to hurry Motorola as a
unconnected being.
Since November 1, 2010, as shpossess in the graph underneath,
Apple’s divide compensation notion on a regisolely deduce has
fallen forthcoming the trounce of augmentation in rights per divide.
While generally weighty, a lagging divide compensation
performance referring-to to rights augmentation is referable usually a
welcomed extinguishedcome. Single would at definite nonproduction the divide
compensation augmentation to be in compact with the rights
Referable fur has progressive restraint Samsung. It has a potent and
solid institution and cheerful relationships with telecom
operators environing the globe. Tranquil HTC, which is a
relatively smentire assembly nucleussed on the Smartphone
employment is arguably the surpass ceced. HTC sales enjoy
already dropped dpossess by environing 27% in Q2 2012. If
things hold to go this fashion, it lookms the most enjoyly
Volume 3 ? No. 2 ? July-December 2012
64
solicitor to be choosen balance by Microsoft. It’s divide compensations
enjoy already touch a 7 year base dpossess by approximately 80%.
http://wwwmpoweruser.com/
1. Financial Impression
With the collaboration of Google with Motorola, Google
has accustomed the best of its peel advantages from
Motorola. The fruitss rose from $10.8 billion to $17.5
[1]
billion.
Google’s accumulation , on the other influence, obsolete treasure very quickly
aftercited the declaration losing aid than 10% in
that week going from environing $557 to $499. This is a
spiritless bear observed where the securer tests
a waste in the divide compensation forthcomingcited such an declaration
and the assembly which is secured gains becatruth of the
bargain notion where there is massive destroy that is
expected in each merger.
The week forthcomingcited the collection of the chaffer on 23rd
May 2012 as-well resulted in a refuse in the divide compensation restraint
Google Inc from $608 to $565 becatruth of apprehensions
in the bargain environing the chaffer with some questioning
whether Google’s chaffer is barely restraint indisputables or to administer
the end-to-end test of consumers and others
expecting the rooms to refuse restraint the end of restraintthcoming
augmentation of Google.
It is generally trading environing $642.
Google’s divide compensation bear balance the latest year
Impression on Accumulation bargain restraint Google and Motorola
th
15 August 2011, when Google Inc. (NASDAQ:GOOG)
announced its merger with Motorola Mobility Trades
(NYSE: MMI) the impression could be lookn in the accumulations of
these companies. Google paying $40 per divide of
Motorola led to an approximately 60% augmentation in the divide compensation
of Motorola Variable Trades with a treasure of environing $38
that week elevation from environing $24 per divide in the week
before the declaration.
Motorola’s divide compensation bear balance the latest year
Divide compensations of other players in the bargain
Forthcoming the declaration of Google acquiring Motorola
Mobility Trades, the impression was as-well lookn on other
players of the bargain especiallyApple and Microsoft.
It was believed that Google’s declaration could shift
some Android compositionrs balance to Microsoft’s
Windows phsingle platform. Microsoft’s accumulation rose by 1%
aftercited the odds, whilst Nokia’s rose by 11% ?
reflecting accumulation bargain theory and theory of
Microsoft nonproductioning to choose balance Nokia forthcoming the
announcement.
Apple’s divides as-well augmentationd in the week forthcomingcited the
declaration becatruth there was a spiritless credence in the
65
Volume 3 ? No. 2 ? July-December 2012
bargain that Apple secure reocean unforced by the chaffer and
secure tranquil be a senior player in the bargain.
8.
1. Et subterfuge of Google Liabilities and
stockholder’s equity
9.
Derived from financial propositions
10.
11.
12.
13. .
14. < h t t p : / / i n v e s t o r . g o o g l e . c o m / r e l e a s e s /2011/0815.html>
(source: internet)
References
1.
2.
3. < h t t p : / / w w w . q u o c i r c a . c o m / m e d i a / articles/052012/709/quo%20googerola.pdf>
4. < h t t p : / / w e n k u . b a i d u . c o m / v i e w / a 1 a 6 ff 4 0 3 3687e21af45a9f5.html>
5.
6. < h t t p : / / o n l i n e . w s j . c o m / a r t i c l e / sb100014240527023033605045774142804149239 56.html>
7.
Volume 3 ? No. 2 ? July-December 2012
1 5 . < h t t p s : / / w w w. g o o g l e . c o . i n / s e a r c h ? sugexp=chrome,mod=2&sourceid=chrome&ie=utf -8&q=google??????????? o r s # h l = e n & s c l i e n t = p s y ab&q=legal?????????????&oq=otorola?????? gal&gs_l=serp.3.0.0i8i13i30.240334.246069.0.2 48552.28.25.0.0.0.0.590.6088.0j9j12j3j0j1.25.0...0 .0...1c.akm6kv7euki&pbx=1&bav=on.2,or.r_gc.r_ pw.r_cp.r_qf.,cf.osb&fp=cc73c727133eddf4&biw =1920&bih=895>
16. < h t t p : / / w w w. e w e e k . c o m / c / a / m o b i l e - a n d wireless/google-motorola-merger-winners-andlosers-from-the-deal-762563>
17. <>
18. h t t p s : / / w w w . g o o g l e . c o . i n / s e a r c h ?
sugexp=chrome,mod=2&sourceid=chrome&ie=utf
-8&q=google??????????
19. < h t t p : / / w w w. l e x i s n e x i s . c o m / c o m m u n i t y / c o r p s e c / b l o g s / c o r p - l a w analysis/archive/2012/06/12/china-s-antitrustmerger-authority-handling-of-the-googlemotorola-deal.aspx>
20. < h t t p : / / s e c . g o v / a r c h i v e s / e d g a r / d a t a / 1495569/000119312511225807/dex21.html>
21. The Wharton Financial Institutions Center-The
Working Paper Series: Grant From The Alfred P.
66
Sloan Institution
22. compact and artifice of
merger
23. < h t t p : / / t r a n s i n n o v a t o r s . c o m / h i f i % 20gadgets/mobile_phone/motorola>
24.
34. < h t t p : / ... Purchase tally to look liberal attachment

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