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Schmidt claims Google didn't buy Motorola just for its patents

Perhaps a $2.4bn tax break had something to do with it too
Fri Sep 02 2011, 12:58

INTERNET GIANT Google bought Motorola for more than just its patent portfolio, according to Google chairman Eric Schmidt.

Google's planned buyout of Motorola for $12.5bn was seen by many as a last ditch attempt by Google to get its hands on a patent portfolio that could stand up against its rivals. However Schmidt claims that Google's decision to buy Motorola wasn't just for patents, telling Marc Benioff, CEO of Salesforce.com, "We did it for more than just patents."

Reuters reports that, apart from Motorola's products, Google stands to gain substantial tax benefits. According to tax expert Robert Willens, Google stands to save $700m a year in tax deductions from future profits until 2019. Better still, Google will immediately reduce its taxes by $1bn due to Motorola's US operating loss and by a further $700m a year due to foreign operating loss.

If Willens is correct, and given that tax experts usually know all the tricks in the book we imagine he is, then Google's $12.5bn outlay will be paid off in seven years, without accounting for the 17,000 or so patents it will acquire as part of the deal.

Schmidt of course wasn't commenting on any tax savings anticipated by Google, rather he was applauding Apple chairman Steve Jobs, saying his leadership of Apple was one of the most successful in the last 50 years. Schmidt and Jobs are good friends and until 2009 Schmidt sat on the board of both Apple and Google.

Google still needs the US Department of Justice to rubber stamp its deal with Motorola but most are expecting that to be just a formality. When it does go through, Google will not only have picked up a patent portfolio that should help it defend Android but it will also be able to hand over less cash to Uncle Sam. µ

 

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