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Comment by wtvanhest | Hacker News Reader

GOOG's market cap is $174B. A $12B cash purchase for Motorola Mobility Holdings Inc is not consequential to GOOG's balance sheet. (But it does seem like a big premium given that that price is above their 10 year high.)

There is obviously integration risk, but I believe the integration risk is low compared with the potential upside.

The reality of our world now is that almost everyone in every country living above poverty will own a smart phone.

Buying Motorola gives GOOG the ability to capitalize in a different way than just search and whatever value they get from the patent acquisition is bonus.

5 years from now, this will be viewed as an intelligent acquisition which provided a lot of value to GOOG, but most likely not the way most people are looking at it today.

*Scott's micro-basis is not a good way to look at this acquisition and by not looking at the big picture (mobile growth) he may have made a serious error.

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12/174 =~ 7%, which is a significant amount of any company's market cap, and very consequential to the balance sheet.

I've never heard of such a large integration that has ever worked in the tech field; what percentage of Motorola's employees would be hired by Google through their normal rigorous procedure?

Large integrations have always been failures; this is definitely a bold move, but based on the history of these types of purchases elsewhere in the tech field, and the difference in corporate cultures, the best possible course would be to not integrate at all.

This is true, as well. In my short time (< 2 months) at Motorola in Beijing, I can tell you that very few of the "engineers" here would be hired at Google.

Is that a bad thing or a good thing?

It doesn't have to be either. Culture shock is one of the biggest risks in this deal, and having vastly different hiring strategies will make that risk higher.

Also, the culture here is much different. In fact, two different people on two separate occasions on the three monotonous conference calls we've had on the acquisition have asked how it could "possibly work." We don't have slides or teeter-totters or 20% time or any of that nonsense. Everyone here is about a massive amount of procedural discipline, huge timeframes for projects, and that's all they know.

Large integrations have worked at times in the past mostly when one company bought a competitor (or semi-competitor) for its market share. Generally they haven't been great for employees of the company that was taken over, though.

Some examples include: DEC/Digital (bought by Compaq), Netscape Server business (bought by Sun at the same time AOL bought the rest of the company), Compaq (bought by HP), Lotus (bought by IBM in a hostile takeover), Peoplesoft (hostile takeover by Oracle), BEA System (bought by Oracle), Sun (bought by Oracle).

There are also numerous examples in the telecommunications market.

The Oracle/Sun deal is the most interesting in this context, because it is a software company taking over a hardware company (yes, Sun has software, but one of the reasons Oracle bought it was to compete with HP & IBM on complete system integration all the way down to hardware).

It's clear there are plenty of examples where this didn't work. Google has a huge challenge, but there are some precedents for this working.

May be we have different ideas of what constitutes working out well, I wouldn't have considered the subsequent failure and acquisition of Compaq and Sun to be good outcomes.

subsequent failure and acquisition of Compaq and Sun to be good outcomes

I don't understand what you mean. Compaq and Sun were struggling prior to being taken over, not afterwards.

I'm more familiar with the case of Sun, but in that case some kind of take over was what all the shareholders were hoping for. The employees and many in the tech industry might have preferred a different buyer.

Compaq bought DEC, got into trouble and got bought by HP. It was a fairly short time line between rescuing DEC and needing their own rescue. How is that a good out come? I am not saying buying DEC brought them down but it certainly didn't save them from impending doom.

As far as Sun goes there is a much longer time line between the Netscape purchase and there own, but the way Sun fell apart until its eventual purchase isn't what I would call a paragon of success.

epistasis, It depends on your definition of consequential. To me, having $40B in marketable securities & cash is a huge burden. Investing it in Motorola allows them to get a return on that cash which is fairly safe, but not without risk.

While $12B off the balance sheet is a big number, it is not consequential to their operations or anything else they are thinking of doing. Unless they are going to acquire someone even larger.

A return would imply that this bit of Motorola made a profit wouldn't it?

Which it doesn't really.

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