Google to buy MotorolaMobility in biggest deal ever

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    (Reuters) - Google Inc's biggest deal ever, acquiring Motorola Mobility
    Holdings Inc for $12.5 billion, is an
    attempt to buy insurance against
    increasingly aggressive legal attacks
    from rivals such as Apple Inc.



    The acquisition of one of the mobile
    telecommunications industry's most storied
    names is Google co-founder Larry Page's boldest
    move since taking over as CEO in April, launching
    the Internet giant into a lower-margin
    manufacturing business and pitting it against many of the 38 other handset companies that
    now use its Android software.


    Motorola Inc was split this year into two:
    Motorola Mobility, which got the faster-growing
    cellphone and TV set-top box businesses; and
    Motorola Solutions, which sells gear like walkie-
    talkies to corporate and government clients.


    Google is paying a massive 63 percent premium
    to gain access to one of the mobile phone
    industry's largest patent libraries. The company
    had been under pressure to build a patent
    portfolio after losing out to Apple, Microsoft Corp
    and others in a recent auction of bankrupt Nortel's assets.
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    Unlike the Nortel deal and others, the fact that
    Google avoided having to compete in an auction
    for Motorola by engaging in exclusive
    negotiations for the company underscores the
    pressure it was under to bolster its patent
    portfolio. Paying such a rich premium even though it was the only buyer dovetails with
    analysts' view that the increasingly litigious
    posture its competitors have taken over
    intellectual property left the Internet search giant
    with no choice but to pay up.


    "No matter how you think about this, you have to
    look at it through the spectrum of the Android
    ecosystem under incredible attack from an IP
    (intellectual property) perspective. And this is
    Google going out and trying to fix that," said W.P.
    Stewart Advisors Chief Investment Officer Jim Tierney. "The biggest implication here is that
    Google wants Android to be one of the dominant
    phone operating systems for years to come."

    Wall Street quickly anointed Microsoft a winner in
    this deal, with Windows benefiting should the
    move spur current Android partners to explore
    other options.

    The deal also stoked speculation that struggling
    Nokia and Research in Motion would become
    takeover targets themselves, sending Nokia's
    shares up 17.35 percent and RIM's up 10.3
    percent.
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    Google made its first foray into hardware by co-
    developing the Nexus One phone with HTC in
    2010 -- an effort that met mixed results.
    Monday's deal, however, could mark the start of a
    shift to an Apple-style model, integrating mobile
    hardware with underlying software.

    "Google decided to cross the Rubicon on the
    device side," said Fred Huet, head of telecoms and media consultancy Greenwich Consulting. "There has been growing frustration (at Google) about the lack and speed of internet centric devices.


    "With Nexus they tried to show the industry what
    they thought was the right evolution for
    handsets and it did not have an impact .... With
    the patents they make sure that Android stays
    strong."
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    THE MORE THINGS CHANGE ...

    The acquisition is likely to draw even closer regulatory scrutiny than usual, with the search leader already the subject of antitrust inquiries.
    Experts will want to review how it affects mobile
    industry competition.

    But the deal -- which took Wall Street by surprise
    -- appears to mark a shift in strategy from
    Google's traditional Internet search and
    advertising empire and forays into video and
    social networking.

    "The danger is that other handset makers feel
    disenfranchised," said Nomura Securities global
    technology specialist Richard Windsor. "Motorola
    is the weaker player. This could actually collapse
    the entire community.

    " Page, who also launched the ambitious Google+
    social network since taking over as CEO,
    reassured investors on Monday this would not
    happen, saying Motorola will be run as a separate
    company licensing Android software in the same
    way as rivals like HTC Corp and LG Electronics.
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    Phone makers including Samsung officially said
    they welcomed a deal that will aid their own legal
    battles, but some analysts questioned the
    sincerity of those claims, noting that rival
    companies would now be unlikely to heavily
    promote Android since it would benefit a direct competitor.

    Andy Lees, president of the Windows Phone
    Division at Microsoft, said in a statement that,
    "Investing in a broad and truly open mobile
    ecosystem is important for the industry and
    consumers alike, and Windows Phone is now the
    only platform that does so with equal opportunity for all partners." Some analysts also doubt that Google will
    continue manufacturing handsets in the long
    term.
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    "We don't think they necessarily want to be in the
    handset business. They want those patents first
    and foremost," said Brian Pitz, an analyst at UBS.
    "This is really a game of protection."

    Analysts say that Google's rivals are likely to
    continue to enforce their patent rights on mobile
    devices through legal means. Microsoft, for
    instance, recently settled a lawsuit with HTC over
    the Taiwanese company's Android devices. Oracle
    is also seeking billions of dollars from Google for infringing on Java patents. Analysts expect Apple
    to continue its increasingly effective patent war
    against its rivals as well, which could hurt Google
    by potentially raising licensing costs that need to
    be paid to Apple. While Apple's iPhone leads in market prestige and
    is considered more innovative, Android has
    managed to quietly surpass it in market share.


    Android held a 43.4 percent share of the
    smartphone market at the end of the second
    quarter, ahead of Nokia's 22 percent, according to Gartner data. Apple ranked third with 18
    percent, the data showed.
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    Shares of Motorola Mobility jumped more than 55
    percent on the news, while Google shares fell by
    roughly 1 percent. The deal values Motorola Mobility at $40 per share
    in cash, a 63 percent premium to its Friday
    closing price. The terms of the deal also features
    an unusually rich reverse breakup fee of $2.5
    billion, according to a source close to the
    situation. "It's a deal that will take time to pay off, but they
    have a lot of cash and they want to chase after
    profit," BGC Partners analyst Colin Gillis said. The deal delivers a windfall for investors
    including Carl Icahn, Motorola's top shareholder
    with a stake of just over 11 percent. The activist
    shareholder had been urging Motorola to look
    into splitting off its patent business -- one of the
    biggest in the industry -- from its handset business, ranked eighth in the world by Gartner
    in terms of unit sales. In late July, Icahn even
    went so far as to estimate that Motorola could be
    worth $44 per share, or $13 billion in a sale. Despite cashing out for $4 less than what he
    estimated the company was worth, Icahn said he
    was "quite happy with this result." It's unclear how much Icahn spent on his stake in
    Motorola since he started scooping up shares in
    2007, but regulatory filings indicate it may have
    been about $3 billion. His stake in Motorola
    Mobility is worth about $1.34 billion at the deal
    price, up by $520 million since Friday. Including his stake in Motorola Solutions, Icahn's total stake
    is about about $2.9 billion in the two companies.
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    INTO THE LIVING ROOM

    As part of the deal, Google also gets Motorola's
    set-top box businesses, giving its nascent TV
    operation a much-needed boost by providing it
    with a more direct route into the home. Bernstein analyst Craig Moffett noted that Google,
    a frequent disrupter of the pay-television market
    via its ownership of YouTube and launching of
    over-the-top TV products that allow consumers to
    get streaming video in the home, will now be one
    of its largest suppliers.

    "It will be fascinating to see whether this tempers
    their enthusiasm for disruptive business models
    as they have to face the practical realities of
    satisfying their cable customers," said Moffett. "I
    think the cable industry would be delighted to
    see Google inside the tent."

    Google said it expects the deal to close by the end
    of 2011 or early in 2012, and that it was
    confident it would gain the regulatory approvals
    required in the United States and Europe and the
    blessing of Motorola Mobility's shareholders
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    Others aren't so sure.

    "The legal question here is would this deal give
    Google the incentive to make Android less open
    or somehow discriminate against the other smart
    phone and tablet makers," said Beau W. Buffier, a
    lawyer with Shearman & Sterling LLP. "That will be
    the key issues in any review both here in the U.S. or in Europe."


    The fact that the deal has the support of other
    major mobile device players who have a stake in
    the matter should help Google in the regulatory
    process. Lazard advised Google on the deal, while Motorola
    used Centerview Partners and Frank Quattrone's
    Qatalyst Partners, sources told Reuters.
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    Culled from Reuters

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    THANK U MY BROTHER 4 DAT NEWS, I TOLD U GUYS DAT VERY VERY SOON, ALL THE OLD MEN & WOMEN IN MY VILLAGE WILL ALL START USING ANDROID PHONES COS IT'S THE BEST OK, COME & CHECK OUT THE OPERAMINI ON MY HTC DESIRE HD, ITS VERY COOL & ALL THE ANDROID APPLICATIONS ARE DIFFERENT & SUPER WORKING. LONG LIVE ANDROID.
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    Current Phone:
    Sony Xperia™ Z3
    Teacher: Define Android . Stanley08: THIS is the definition of Android! I'm definitely gonna get this one! Price?!
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