Google surprised markets recently with the announcement of an impending acquisition of Motorola Mobility – the US mobile company’s smartphone business – for $12.5bn (£7.6bn), to be completed at the end of this year or early 2012
Alison Hyde, Technology Fund Manager at Cavendish Asset Management, comments:
“Whilst details are still emerging, the key factor here seems to be Motorola’s impressive patent portfolio. Intellectual Property – particularly with regard to wireless technology - has developed into a key battleground as tech companies scramble to position themselves to dominate the promising smartphone market, attested to by the recent slew of patent battles involving names such as Apple and Samsung.
“Only recently, in July, Google found itself massively outbid – by a margin of several billion dollars – for a slice of Nortel’s coveted patent portfolio by a consortium including Apple, Microsoft, and RIM. This is likely an extension of that strategy – an attempt to protect themselves as battles elsewhere turn ugly. Talk on both sides would seem to point in this direction: activist investor Carl Icahn has made big noises about how Motorola should look to do more to leverage its patent portfolio, and Google CEO Larry Page today made reference to Motorola’s long history of technological innovation in his account of the takeover.
“The prize of interest lies in the intellectual property assets, which also happen to come with an operating company attached. Mobility holds 17,000 existing patents and has 7,500 applications pending – no small number. This acquisition may put it on a firmer footing as it continues to fight its rivals for an ever bigger slice of the Smartphone pie.”
Motorola spun off Mobility as a separate business in January this year.
