Google recently purchased Motorola Mobility for about US$12.5 billion (a staggering amount). However, some people are no seeing not only does Google benefit from the thousands of patents (nearly 17,000 as I recall) that Motorola has, but also see significant tax benefits to Google as Motorola continues to report a net operating loss on the income statement. As per a Reauters report:
By agreeing on August 15 to pay $12.5 billion in cash for struggling Motorola Mobility's vast portfolio of 17,000 patents and 7,500 pending patent applications on top of its handset business and television set-top boxes, Google is building a defensive bulwark for its Android phone software, already available on Motorola phones among others.
The acquisition, Google's largest ever, has legal tax and accounting benefits, many associated with the money Motorola Mobility has lost over the years, according to experts who have studied its details.
"The tax benefits of the deal make what was a good deal into a great deal," said Robert Willens, a New York accounting and tax expert. He estimated that through the acquisition, Google can expect to reap $700 million a year in tax deductions from future profits each year through 2019. Google also will be able to immediately reduce its taxes by $1 billion due to Motorola Mobility's U.S. net operating loss, and by a further $700 million due to its foreign operating loss, he said.
However, while some see the patent-purchase as being a good thing, others see the patents as "crap." (See report:
Google says it bought Motorola mainly for its patents. But according to one analyst, those patents are "crap" and won't help Google very much in its patent battles over Android..
The future for smartphones in the US is certainly getting more interesting.
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