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Google's Schmidt: Motorola Deal Was About 'Patents, Products, People'

6/22/2012 10:40 AM Eastern

Disputing the notion that Google bought Motorola Mobility solely for its valuable patent trove, executive chairman Eric Schmidt said the deal was driven as much by Motorola's products and talent.

"We bought Motorola for the sum of patents, the products, the people, the innovation," Schmidt said, speaking at the company's annual stockholders meeting Thursday. "There's some unique innovation inside Motorola that we really like."

Google completed the $12.5 billion cash deal for Motorola Mobility on May 22, after the transaction received final regulatory approvals.

Google has said repeatedly that it will operate Motorola as a separate business, and that the Android mobile operating system would remain "open." In large part, that positioning is to allay fears of device manufacturers such as Samsung Electronics and LG that Google will use Motorola to compete aggressively in smartphones and tablets.

At the shareholders meeting, chief financial officer Patrick Pichette said Google does not plan to fully integrate Motorola into its own operations and that Google will break out Motorola financial results in earnings reports.

"It is very important that from the economics and from the culture, [Motorola] stays on its own battlefield, if you wish," Pichette said, noting that Motorola is more of a hardware company compared with Google's software focus.

Motorola has "fantastic assets that need to be reset and reprioritized in many ways," Pichette added. "In that context, think of Google as actually, in a way, taking Motorola private."

The acquisition was made with a long-term, strategic agenda in mind, according to Pichette: "We didn't buy Motorola for the next two quarters. We bought it for the next decade to make amazing things happen."

When Google announced its bid for Motorola Mobility in August 2011, CEO Larry Page said the company wanted to obtain Motorola's 17,000-plus patents to "better protect Android from anticompetitive threats from Microsoft, Apple and other companies."

Schmidt said Android was "on fire," claiming that more than 900,000 Android-based devices, from 55 manufacturers, are activated per day worldwide by more than 300 carriers. "Take a look at the growth rate -- this is by far the most successful... thing to happen in history, as best as I can tell, of computing," he said.

When Google bought YouTube in 2006, "we faced a lot of skepticism," Schmidt said. Today, YouTube has 800 million monthly users, who upload one hour of video per second. "This company is always trying new things," he said.

At the outset of the meeting, Schmidt said Page could not attend the event because he had lost his voice. Page also will miss the Google I/O 2012 developers conference in San Francisco next week and will not participate in the earnings call in July.

Schmidt relayed that co-founder Sergei Brin joked that Page's laryngitis "will make Larry a better CEO because he is going to have to choose his words very carefully."

The full webcast of the Google shareholder meeting is available at http://youtu.be/5DSqYI5sess.

 

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