The $12.5 billion deal will see Google acquire the phone-making half of the Motorola Inc. spin-off that took effect in January. Google is paying $40 a share in cash - about a 63% premium to Motorola Mobility's closing price on Friday. The deal - which Google says will help it "supercharge" its Android smartphone business - will close late this year or early in 2012.
I used to look at Google as the next Microsoft Corp. (Nasdaq: MSFT). But Google has achieved a status that Microsoft shot for - and missed: It's become an online leader and a factor in the everyday life of consumers. Google also has massive growth potential available, and hasn't quit trying to grow.
And that's a good reason - perhaps the best reason - to own Google today and into the future.
Google's purchase of Motorola Mobility will showcase this potential. It positions Google to pair Motorola smartphones with its Android software and compete against iPhone-maker Apple Inc. (Nasdaq: AAPL).
However, Google's new purchase does a lot more than dangle a bigger slice of smartphone market share - and this reason is why I finally decided Google is a "Buy." (**).
Motorola Mobility: All About the PatentsThe game-changing benefit for Google in the Motorola Mobility deal is the intellectual property Google is picking up. We are talking about 17,000 patents in this purchase.
A stronger patent portfolio allows Google to reduce royalty costs by using cross-licensing agreements with handset makers. And it protects the Android smartphone market from getting slammed with patent fees (and lawsuits) as sales continue to climb.
The number of Android-software-powered phones jumped 300% last quarter.
Motorola Mobility's patent portfolio will enable Google to move to hardware design for its Android phones. That will give Google both the phone operating system and the intellectual property to act as a gatekeeper in the mobile space.