I offer some comments but also offer a different perspective to the acquisition of Motorola Mobility by Google.
I agree with Maria that this is a vertical acquisition. But I differ in that feel that Google, at it’s core, is a software (search engine to be more precise) business. And that the purpose of an Android open source operating platform is that with the dawn of mobile browsing, Google needs to set as many mobile browser home-pages to Google.com as possible. So I’m behind the view that the Motorola acquisition was primarily a move to secure Intellectual Property rather than turning Google onto hardware manufacturing.
Spinoffs
But before Motorola Mobility was acquired, an important event happened – a spinoff. Motorola broke up into Motorola Mobility and Motorola Solutions in January 2011. The spinoff, while a financial event, helped unlock real value in the company.
Spinoffs create value because investors like companies which are easy to understand and value. And different investors look for different mixes of investment in their portfolios. Joel Greenblatt, an investor, writes that both spinoffs and their parents perform better (10% and 6% respectively) in a three year period than their peers.
And in this case, we can see another effect of spinoffs – they make companies better suitable for acquisitions, which normally pay 30% premium over market price in Canada.
So if Motorola didn’t break up, the Google acquisition would never have happened.
http://www.gurufocus.com/news/807/how-joel-greenblatt-uncovers-the-secret-hiding-places-of-stock-market-profits