Googel did not overpay for MOT

Many analysts came out and complained that Google overpaid Motorola Mobile. Their logic is flawed. Some simple analyses.

Google is paying 12.5 billion dollars. Motorola has over 3 billion in cash with no debt. By the deal closing time, the cash will be around 3.5 billion. So Google is basically paying 9 billion. MOT is generating 450 million free cash flow a year. Given a 10 multiple, it is worth 4.5 billion. Notel's patent portfolio was sold for 4.5 billion. It is reasonable that Google pay 4.5 billion for MOT's patent portfolio. In addition, Google gets 5 billion dollar goodwill which can be write off gradually. The tax benefit over long term will be at least 1 billion.

The second complain is the combination will impede the growth of Android. It is pure nonsense. If Android is the best platform out there, then HTC, Samsung and others will continue to use it.