Why is Google mum on new details about Motorola?

Posted on July 24, 2012


“The lines between business and technology development are beginning to blur. It seems as though the evolution of technology is directly related to the ease and convenience in which we are able to complete our daily tasks. In other words, innovative, functional technology equals an easier life, which in turn equals value”, said Marci Troutman, CEO of SiteMinis, Atlanta.

Google (NASDAQ:GOOG) offered little insight into its recently completed $12.5 billion acquisition of Motorola Mobility during its second-quarter conference call, offering only barebones financial details on the company and a few comments on the company’s performance in the quarter. The situation is a dramatic reversal from several months ago, when investors were able to comb through Motorola’s investor conference calls and earnings releases to get a sense of the company’s smartphone shipments and financial performance.

“We’re totally excited about this opportunity,” Google CFO Patrick Pichette said. “Everybody should expect some changes at Motorola.”

However, he repeatedly said that Google has “nothing to announce yet” on Motorola. “It’s a little too early to comment on big changes right now,” he said.

“Now more than ever before, we are bombarded with a world of developing value adding technologies designed to make our lives easier. And within that world of developing technologies, none have exceeded the rapid adoption rates than that of the mobile phone.

It is this unprecedented technological shift that is causing the world’s largest companies to make bold power moves in order to secure their stake in the rapidly developing mobile markets.”

“As if there was anything left to debate in regards to mobility devices and how they will completely reshape the way we do business, shop, learn , and share information, Patrick Pichette, CFO at Google (NASDAQ:GOOG), was recently quoted in a press conference surrounding Google’s recent acquisition of Motorola Mobility in which he stated “For us, mobile is like desktop in 1999.”

“That statement alone should be enough to stop anyone dead in their tracks. For over a decade now desktop computers and the record breaking adoption rate of the Internet has transformed almost every aspect of our daily lives. Now, one of the highest-ranking executives at one of the world’s most powerful companies is stating that he and his colleagues at Google are counting on another revolution of equal or greater magnitude.”

“Google is backing up its beliefs by putting its money where its mouth is i.e. purchasing AdMob, a large mobile advertising network, for a cool 750 million in 2009. Google, a company that makes the vast majority of its money via ads on its search engine, sees the ability to effectively advertise to mobile users as an enormous opportunity for increased revenue generation and therefore one of its primary objectives.”

“As a result, it doesn’t come as a surprise that (with a budget the size of Antarctica and a clear understanding that dominance as a technology and business leader is directly linked to their role in the ongoing mobile revolution) that they would be willing to take an R&D shortcut and acquire Motorola Mobile, one of the world’s largest mobile hardware manufacturers.”

On Motorola’s financials, Google said Motorola revenues clocked in at $1.25 billion ($843 million from the mobile segment and $407 million from the home segment). Motorola’s operating loss was $233 million in the quarter ($192 million for the mobile segment and $41 million for the home segment).

Pichette said Motorola’s second-quarter results were partially impacted by a number of one-time expenses, some related to Google’s acquisition of the company, and that it might take a few months for Motorola’s financial situation to shake out. However, he said Motorola likely wouldn’t continue to lose money. He specifically mentioned the company’s Razr Maxx as a successful device during the quarter.

Google executives also reiterated the company’s successes in the mobile advertising space, noting an increasing number of mobile queries to its offerings, and the company’s continued efforts to make its services available on mobile.

“We are seeing a phenomenal amount of queries in mobile across the board,” said Pichette. “For us, mobile is like desktop in 1999.”

Specifically, Google said it improved its YouTube app for Android for consumers and it merged its AdMob and AdSense offerings for advertisers, among other activities. Interestingly, Google said it now counts over a million advertisers that are pushing ads through Google to mobile users.

Overall, Google reported net income in the second quarter of $2.79 billion, up from the $2.51 billion it scored in the second quarter of 2011. Google’s overall consolidated revenues were $12.21 billion for the quarter, an increase of 35 percent from the same period a year ago.

Google CEO Larry Page did not attend the company’s earnings conference call due to a previously disclosed illness. Google executives said Page has lost his voice but is still running the company.

Google announced its acquisition of Motorola last year, and the deal closed in May. Google has said it plans to operate Motorola as an independent business that will focus on releasing a small number of cutting-edge devices. Motorola’s hardware prowess could significantly aid Google as it moves into the hardware business, as evidenced by its recent release of the Nexus 7 tablet.

At its annual I/O developer conference in late June, Google revealed that there are now more than 400 million activated Android devices worldwide, up from 100 million a year ago, Additionally, the company disclosed that there are one million Android activations per day now, up from 400,000 a year ago.