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  1. Technology
May 2, 2012

Motorola continues to struggle ahead of Google acquisition

The company is reporting flat revenues and increases losses, and is banking on its acquisition by Google and new Razr devices to get it out of its funk.

By Vinod

Motorola Mobility reported net revenues of $3.1bn in the first quarter of 2012, up 2% on this time last year. Its net loss was $86m, up 5.8% on first quarter 2011’s $81m. The company has $3.5bn in cash and equivalents.

"The introduction of Razr Maxx marked another successful addition to the Motorola product family and contributed to our growth in smartphones. Our Home business delivered another solid quarter highlighted by improvement in year-over-year profitability," said Motorola Mobility’s CEO Sanjay Jha.

"We continue to work closely with Google to complete the proposed merger during the first half of the year."

Motorola’s home segment revenues in the first quarter were $884 million, down 2 percent compared with the year-ago quarter. GAAP operating earnings improved to $68 million, compared to $53 million in the year-ago quarter. Non-GAAP operating earnings were $91 million compared to $81 million in the year-ago quarter.

Despite the aforementioned relaunch of the company’s iconic Razr line through the Razr Maxx and other new devices such as the Droid 4, the mobile division posted losses of $121m for the quarter compared to $89m a year ago. Its revenues were up 2% to $2.2bn for the quarter.

The company joins a long list of former industry leaders, such as Sony Ericsson, LG, Nokia and RIM in struggling to compete with Apple and Samsung devices at the high end of the market, despite world smartphone sales rising by 50% in the last year.

The company is also attempting to challenge ZTE and Huawei in the Asian markets by producing low-end touch screen smartphones, a key growth area.

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The acquisition by Google is at $40 per share in cash, valuing the company at $12.5bn. The deal is expected to close during the first half of the 2012 financial year – subject to clearance by the authorities. Motorola lists ‘merger-related costs’ as $17m on its books.

Google has bought the company as much for its patent portfolio dating back to the dawn of the mobile phone era, which gives it a leg up in its various patent battles running all around the world (see ‘further reading’ below)

Google has also promised not to give any favoured status to its own smartphone developer when it comes to its Google Android mobile operating system.

Further reading:

Google acquires large number of patents from IBM

HTC buys Google patents to fight Apple

Oracle Google patent infringement trial begins

Microsoft wins restraining order in patent litigation with Motorola

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