rastard 1:30 pm on August 15, 2011 174 days ago Reply

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  caruso2323 11:53 pm on August 15, 2011 174 days ago Reply

  Rastard,

  Why suicidal ? Simply Because :

  1) GOOG IMHO appears to have paid unduly a 60% premium with the 12.5B take-over… MMI previously rose up to $27.70 from about $22 by over 25% on July 21, following Icahn’s urge to use MMI’s patents on 4G … That is how the market valued these patents ! …

  So Rastard, what do you think GOOG is getting for paying that extra $12 on speculative patents on 4G smartPhones that MMI is having a tough time manufacturing ? What is the worth of a company which is barely profitable ? while having difficulty competing with Samsung and HTC… Were you not able to get a clue by MMI’s plan on suing Samsung and HTC ? … What patents were they planning to invoke : 4G of course !

  Jul 21, 2011 22.54 27.70 22.32 25.19 25,084,193

  2) “The troubles saddled Motorola Mobility with a $56 million loss in its latest quarter, sinking the company’s stock price to one of its lowest points since its January spinoff from the old Motorola Inc. The remaining part of that company now runs as Motorola Solutions Inc. In contrast, Google earned $2.5 billion in its most recent quarter ending in June.”

  3) GOOG’s cash reserves are about $39 B and that is not NET as GOOG borrowed some 2B recently… Compare these with AAPL’s actual 76B and soon to be about 90B by October …
  GOOG’s is slowly but surely running out of dry-powder in its capacity of moving the needle.
  It is getting weaker as it is now forced to spend $ in a defensive strategy, spreading out getting distracted by legal battles, improvising upgrades to its Android platform while competing with Amazon, FaceBook, Apple, MicroSoft and a bunch of other engine research companies… It does not seem to be expanding geographically and missed out big time on Asia…

  While GOOG is on the defensive, AAPL is positioning itself for some major acquisition that would further consolidate its grip on its profit engine : The iPhone, and on its revenue engine : The iPad.
  IMHO that acquisition maybe in the manufacturing field for its vital parts : LCD panels, ARM CPU’s , SDRAM, batteries etc… I think that Apple would not want to depend on external suppliers.
  The Japanese earth quake, Tsumani, Meltdown etc… Further more , they may want to buy out Foxconn … If Foxconn is planning to deploy 1-2 Millions robots to assemble some processes would you not think that given some incentives from the U.S. gov. it would not want to build some factories say in Texas or California ? Close enough to the Mexican border, so that complimentary processes involving cheap labor as in Mexico ?

  Of course all the above is my OWN PURE SPECULATION … But one thing is sure : Apple is poised to move the needle BIG TIME while being focused on its business, unlike Google…

  And I think that Shmidt would have blocked that buy-out ! …

  —————–

  Every one though that Android was a free open platform… All of a sudden :

  A) A price of 12.5B

  B) This acquisition does not solve the following problems :

  - AAPL suit against MMI in the EU… Expect same to be filed VERY SOON in the U.S. the cradle of MMI’s products…

  - Oracle’s suit against the Android platform, that was strengthened by GOOG’s confirmed admission that they “borrowed” the code

  - AAPL’s determination to block the Android Tablets (Samsung’s Galaxy 1, and soon to follow the Galaxy 2 in EU, Korea, and soon in the U.S.) as well as the Xoom …

  - MSFT will continue its on-slaught on the Androids … They got HTC/MMI , they will go after Samsung very soon

  - AAPL IMHO may now focus its attack now to GOOG

  - Assuming that GOOG does not spin-off MMI’s smartPhones business minus its patents… “The deal will test Page’s ability to avoid a clash of cultures while he is still learning the nuances of the CEO job, which he took only four and a half months ago. With 19,000 workers, Motorola Mobility’s payroll isn’t that much smaller than Google’s 28,800.”

  - Assuming the same as above …. How can you assume that GOOG+MMI can come out with innovative products ? … Motorola Mobility, based in Libertyville, Ill., has been struggling to come up with a product that has mass-market appeal since it introduced the Razr cellphone in 2005.
  They did thanks to its integration of iTunes playback of mp3 music…

  - The company had some success with the Droid, one of the first phones to run on Android, but it now ranks a distant eighth in the smartphone market, with 4.4 million units shipped in the second quarter, according to research firm Canaccord Genuity. By comparison, the market-leading iPhone shipped about 20 million.

  - The recent attempt to counter the iPad hasn’t paid off for Motorola Mobility, either. In an effort to drum up more demand, the company recently cut the price on the Wi-Fi-only version of its tablet, the Xoom, to $499 from $599. That is optimistic since they can soon be banned all together … And That comes on the heels of HP’s dropping its DOA’S 7″ tablet from $499 to $399…

  ———————–
  But there are more fundamental questions about GOOG :

  1) Just how much profits are derived from its mobile search platform (including those piggy-backed on AAPL’s iOs that has been tolerated in a so-far NON WAR times)… Oracle needs to be given that piece of information if it is to be nice with Google and charge licensing fees for “borrowing’ its code … Otherwise you can bet your shirt that Oracle will ask for a BAN of ALL ANDROID products …

  2) What are the sources for a 30% future growth for Google ?

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    caruso2323 1:38 am on August 16, 2011 174 days ago Reply

    The But more fundamental questions about GOOG future’s growth, may be projected from the past :

    - 2007 : 48% (WOW good old times)
    - 2008 : 25% (Upss … But it is the beginning of the recession stupid !)
    - 2009 : 19% ( Upss .. But it is the end of the recession stupid !)
    - 2010 : 28% ( YAY ! … The economy is growing )
    - 2011 : 20% ( Upsss… The economy is growing slower than expected)

    What could GOOG’s growth be assuming a recession happens in 2012 (not so likely) or in 2013 (much more likely) ? … I’d say 8%-10% AT BEST assuming that GOOG lays off thousands of its employees and get a handle on its extravaganzas !…

    Someone please post AAPL’S Yearly growth rate !
    Thanks

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      caruso2323 6:03 pm on August 17, 2011 172 days ago Reply

      I am no longer the one thinking that ANDROID will be gone in two years from now … Symco who has earned the greatest respect among the pro’s think likewise :

      Apple 2.0Mac news from outside the reality distortion field
      4 comments
      Motoroogle: The long view
      0

      Print
      Comment

      By Philip Elmer-DeWitt August 17, 2011: 1:12 PM ET
      In the Harvard Business Review and a 50-minute podcast, a deep dive into what it means

      Horace Dediu — the Harvard-trained analyst writes the influential Asymco blog — was studying the mobile phone market for Nokia (NOK) in 2005 when Google (GOOG) bought Android, primarily as a defense against the perceived threat that Microsoft’s (MSFT) was about to do to cellular telephony what it did to desktop computing.
      The real threat, it turned out, was Apple’s (AAPL) iPhone, which came along two years later from a different direction.
      That’s the context, Dediu maintains, in which to try to make sense of Google’s proposed acquisition of Motorola Mobility (MMI).
      Dediue took a crack at making sense of the deal in two venues Tuesday — in a piece published by the Harvard Business Review and in a 50-minute “Critical Path” podcast on the 5by5 Network. Together, the two piece constitute the deepest dive we’ve seen — and we’ve seen plenty — into the meaning of the $12.5 billion merger.
      Dediu’s conclusion: The deal doesn’t make sense. Not as a pure patent play. Not as a entry into cell phone manufacturing. And not as a combination of the two.
      “The big secret here,” he concludes in his Critical Path piece, “is that I don’t think Google knows what it wants to do yet.”
      Google’s original strategy, he says, was to disrupt Microsoft by giving away what Redmond was selling — a mobile phone operating system — and making money by providing online services (primarily advertising).
      But Google was still using Microsoft’s modular approach, treating the OS, devices, and services as three separate businesses. Unfortunately for the licensees of Microsoft Windows Mobile, that made for an unbearably clunky smartphone.
      Apple’s breakthrough — like Research in Motion’s (RIMM) before it — was to build an integrated device that offered users a smooth, seamless experience.
      So Google went back to the drawing board and redesigned Android to mimic the iPhone’s look and feel. But it was still going modular — not integrated like Apple. It was giving away the OS, letting others — Samsung, LG, HTC, Motorola etc. — build the devices that ran it, and hoping to somehow make money selling mobile services.
      The money in mobile services hasn’t yet materialized and the modular approach opened several “cracks” in the Android strategy that Dediu enumerates in the Harvard Business Review:
      “Issues with intellectual property in Android caused some licensees to have to pay royalties to patent holders, increasing the cost. Fragmentation took hold where some versions of the software were used by some licensees on some products without the option or incentive to upgrade. Finally, some vendors modified the software resulting in missing features or inconsistent user experiences — even to the extent that Google’s own services were omitted.”
      The 24,000 or so patents and patents pending that Google would acquire if the Motorola deal goes through might help protect its licensees on the intellectual property front — although as FOSS Patents’ Florian Mueller points out owning those patents didn’t protect Motorola from getting violently sued by Apple and Microsoft.
      Trying to compete with its licensees by building its own smartphones, however, creates even bigger problems — as Nokia learned when its Symbian partners eventually abandoned that ship.
      Dediu concludes that the Motorola deal was hastily put together and not very well thought out. It’s “reactionary, not proactive,” he says. “It’s playing chess not looking five moves ahead but looking one move ahead, which is not a very good way to play the game.”
      The break-up cost of the proposed acquisition — the price Google would have to pay Motorola if it falls through — is an extraordinary $2.5 billion, which suggests that someone knew that the deal had its risks.
      In the end, Dediu repeats doubts he has expressed before about how committed Google management really is to Android’s long-term prospects.
      “Android,” he says at one point in 5by5 podcast. “could cease to exist within two years.”
      We’ll see.

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    rastard 2:31 am on August 16, 2011 174 days ago Reply

    [TL; DR, and Nicu just asked met to write shorter responses, so I won't bother to answer every point in your post.]

    1) “GOOG IMHO appears to have paid unduly a 60% premium with the 12.5B take-over”

    There are two separate factors here: 1) whether MMI (and it’s patents) were worth buying at all, and 2) whether $12.5B was a worthwhile price. I’m not going to disagree with you that the acquisition wasn’t worth $12.5B — I don’t know that and wouldn’t even know where to start in calculating it. For argument’s sake though, let’s say that Google did overpay $5-6B or so — that’s hardly “suicidal” for Google.

    Regarding the 2nd factor about whether MMI’s 17000 patents are useful — your [completely unsupported] assertion that Motorola’s portfolio is obsolete and completely worthless makes me think that you haven’t been following the patent wars at all. The battles have never about one killer patent, and always about who has the largest arsenal. Patent wars tend to drag out for years, most get settled in cross-licensing agreements, and there hasn’t been a single smartphone infringement suit that’s been won recently that’s been based on the latest and greatest technology. Relatedly, did you actually think that Nortel’s 6000 patents that Apple et al just bought were all current patents?

    2) “While GOOG is on the defensive, AAPL is positioning itself for some major acquisition that would further consolidate its grip on its profit engine”

    You surprisingly, seem to have a fundamental lack of understanding about Apple’s acquisition strategy. Apple hasn’t and doesn’t make major acquisitions. On what basis are you now so blithely asserting that Apple is going to break completely with its history to do so now? Oh wait — I forgot — you think they should (and could) buy Samsung.

    3) ““The troubles saddled Motorola Mobility with a $56 million loss in its latest quarter”

    $56M is a rounding error for Google — far from a loss that is “suicidal”. Further, MMI’s operating success/failure, I’d argue, is largely irrelevant because Google didn’t buy them for it.

    4) “Otherwise you can bet your shirt that Oracle will ask for a BAN of ALL ANDROID products”

    Like with all patent suits, Oracle can *ask* for whatever they want. Getting what they ask is a different story, and I haven’t yet noticed *anyone* but you making the assertion that Oracle will actually do that. I think you need to go back on your meds.

    • 

      caruso2323 3:05 am on August 16, 2011 174 days ago Reply

      Rastard , The one who needs med is no one else than yourself … You will probably be compelled to use them as your investments in GOOG SHRINK ! …

      1) I never said that this move is SUICIDAL because of the 12.5B … But mainly because instead of forging alliances they appear to be breaking them .. Their argument about cash is they don’t give a fack about you and about its shareholders… That cash is supposed to belong to you and not to try fantasies …
      They say money is cheap ! That having cash is no big deal ! …

      2) One one hand you say that -50M is a rounding error for GOOG … and 6B extra may sound no big deal to you … LOL … Last time they made a simple adjustment of 1B , because they did not account for a settlement with the DOJ …

      3) If I was you Rastard I would be worried about this frivolous way of running a business … I would be equally worried not having a clue about their business plan, their business strategy …

      Good Luck Rastard … From now on I will be ignoring your posts because you are in a state of TOTAL DENIAL

      • 

        rastard 9:19 am on August 16, 2011 174 days ago

        “You will probably be compelled to use them as your investments in GOOG SHRINK !”

        Thanks for worrying about me. It’s touching. No need to though, as my AAPL holdings outweigh my GOOG holdings, so I’ll be doing fine no matter what happens.

        “But mainly because instead of forging alliances they appear to be breaking them”

        I understand why you keep saying that, I simply disagree with you wrt to the MMI acquisition. I’ve already stated why in several posts, so I won’t repeat.

        For the record though, what are the alliances you think that Google has forged to date, and which alliances do you think that Google has broken? Similarly, what alliances has Apple forged, and which alliances have they broken?

        “Their argument about cash is they don’t give a fack about you and about its shareholders”

        Their argument is completely consistent with their founders statement from their IPO letter:

        “Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently.”

        and

        “If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long term view.”

        Shareholders *should* have read that before investing in Google, to know what kind of company they were buying. As a GOOG shareholder, I’m completely aware that short-term cash/profits are *not* the top priority of Google. IMO, it’s not Google’s duty to give a fack about those shareholders who didn’t.

        “and 6B extra may sound no big deal to you”

        I never said that. While $50M is a rounding error to them, $6B is a lot of money even to Google (or Apple). I simply said that $6B being overpaid for MMI isn’t “suicidal” for Google.

        “I would be equally worried not having a clue about their business plan, their business strategy ”

        If I felt they didn’t have a clue, I would be worried. If I felt *I* didn’t have a clue what their strategy might be, I would as well. I don’t feel that though, so I’m not. Using this acquisition as an example, I’ve asserted:

        1) Google’s core competency is to make money off of Ads, from which it makes lots of money.
        2) MMI’s core competency has been to design, manufacture, and sell mobile devices, from which it has actually made comparatively little money.
        3) Android’s rapid adoption has been primarily attributable to having dozens of OHA partners building and selling Android devices instead of Google owning the full HW/SW ecosystem (ala Apple)
        4) Because of 1, 2, & 3, it seems obvious that Google will make more through Ad sales via the full Android ecosystem that it could possibly make from MMI’s device sales.
        5) Thus, Google bought MMI to build up (and/or protect) that Android ads revenue stream, not to make money off of device sales.
        6) the only way for them to do that is to offer the protection of MMI’s patent portfolio to their partners.

        As a business strategy, this makes complete sense to me — especially since for years they (and others) have been saying that mobile is the future of online advertising. You’re welcome to disagree.

        As of last October (when only 200K devices were being activated per day), Android was already on a run rate to generate over $1B in mobile Ad revenue (http://blogs.computerworld.com/17169/android_brings_in_1_billion_a_year_to_google_helps_drive_soaring_profits). Today Android is allegedly activating nearly 3x that many. *If* ad revenue growth has been comparable to Android user growth, that would put Android-generated Ad revenue at ~ $2.75B. Nearly 200% growth in less than a year. Seems like a good strategy/plan to me.

        That you keep asserting that Google doesn’t have a strategy/plan — simply because you’re not capable of understanding it — seems to be nothing more than a sign of your immaturity…

      • 

        rastard 9:21 am on August 16, 2011 174 days ago

        Typo should have read: “Nearly 300% growth in less than a year. Seems like a good strategy/plan to me.”