Wednesday, August 17, 2011

Googorola or Motoroogle

Unless you live under a rock you must have heard the big news yesterday. Google bought Motorola Mobility for $12.5 billion. Almost as soon as the news broke the barrage of articles flooded the airwaves. Every other Tweet in my timeline seemed to herald another report or analysis. So being a newly minted columnist, I felt compelled to also write about this event.

These professional journalists have already beat me to the punch. The brilliance of Larry Page (Google CEO) and the people who orchestrated this deal has been loudly proclaimed, while story after story explained all the justifications Google had for making this strategic acquisition. Some observed that now the longstanding patent conflict would come to an end, or pointed out how Google could now compete directly against Apple. Google can more fully  integrate Android into the hardware, another one said, and still another from a legal perspective pointed out that if approved this deal paves the way for more acquisitions including perhaps Nokia or RIM. Each of the good things that could arise from this deal had been identified.

Of course in other stories you could read how Google overpaid, and how the other major phone manufacturers have been alienated. Android will be abandoned and phones will all be using the Mobile OS from Microsoft. You would learn that Motorola's patents are too weak to provide any defense, how the manufacturing division will clearly be spun off and how, according to S&P, this is a good time to sell your shares in Google. Clearly this deal would result in bad things happening.

I have been involved in a fair number of mergers and acquisitions in my day. Deals that involve billions of dollars are managed closely and very carefully evaluated. It is highly likely this transaction was studied seven ways to Sunday. The potential value and return on investment had to meet certain criteria for management to approve. We may not yet know the key driver. We know what Larry told us in his blog and what we can read in the press release. But only time (or possibly Wikileaks) will reveal all as Google's full strategy unfolds, evolves and becomes truly apparent.

The speed and availability of information today is marvelous, but can also work against us. When program trading goes awry, for instance, we have these wild and uncontrolled point swings in the stock market. A man is shot by the police and before any facts can be determined, the act is condemned, relayed in social media and riots are breaking out. Today, gossip can spread to the four corners of the earth in less time than it takes for it to circulate around an office. On a macro level, loss of confidence in the economy can quickly be telescoped and become a self fulfilling, self perpetuating problem.

Perhaps when these mega-deals are announced we ought to take a little more time to allow all the information to become available. Let's listen a little more, study and think through what the long term implications may be. Then we can publish a more considered opinion. Excessive speed and the resulting breakthrough can sometimes lead to a undesirable result.

Having thought about this for a while now, in my opinion, they should call it Motoroogle.

Captain Joe

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