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Does Google Have a Plan B?

Jeff Baumgartner
The Bauminator
Jeff Baumgartner
12/7/2012
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2:25 PM -- As Google (Nasdaq: GOOG)'s auction for Motorola Mobility LLC 's cable unit reportedly winds down, The Wall Street Journal notes that a deal could fetch between $1.5 billion and $2.5 billion. (See Google Sets Deadline for Motorola Home Bids .)

Google, we've been told by people familiar with the process, did not get as much interest as it wanted from suitors that are willing to buy the whole Moto unit, which makes cable set-tops, cable modems, edge QAMs and other cable access network gear.

With that in mind, bids are expected to come in at the lower part of the range. "It has to be sub-$2 billion at the moment," says an industry source who has been tracking the progress of the sale process. (Motorola isn't commenting and Google hasn't responded.)

Will that be enough for Google to do a deal? Maybe not. As the Journal noted, Google could extend that deadline. A source familiar with the process gives Google a 50/50 shot at securing a buyer before the end of the year.

But if it goes beyond that, Google, I'm told, could consider pulling the whole thing back and instead look to break up Motorola Home and sell off its different piece-parts. That would complicate things, but it would likewise expand the bidding to many more companies and make the auction more competitive. Google might be willing to do it if it believes it can get a better price for Motorola's individual parts that it can by selling the whole enchilada to one bidder.

That would put things off until 2013, but maybe that's not a bad thing. Google could use that time to resolve its pending litigation with TiVo Inc. (Nasdaq: TIVO), which is suing Motorola and believes it deserves "billions of dollars" in damages. That of course does not mean TiVo would get billions if it won, but it could end up being more than the $250 million TiVo's getting from its settlement wtih Verizon Communications Inc. (NYSE: VZ). (See Verizon to Pay TiVo $250M to Settle DVR Fight .)

And the prospect of a more damaging lawsuit could give bidders reason to pause, and likewise give Google yet another reason to do the same.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/10/2013 | 4:00:16 AM
re: Does Google Have a Plan B?


Still asking around but so far i have not heard that Google has offered to indemify bidders from the TiVo litigation as part of a deal. I'd need a lawyer to weigh in if that's even a legal possibility.  Even if Google kept all the IP, i'm not sure now that would work if this goes to a trial and an injunction resuts..It would seem that whatever company ended up with the Mot set-top assets would still be prevented from shipping DVRs. JB

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
1/10/2013 | 4:00:15 AM
re: Does Google Have a Plan B?


And you might have also read that Pace confirmed  today (Dec. 10) that it put in a bid for Motorola Home.  Got a story on the way that spells out a hard number, but Google, I'm told, will help a buyer secure a sizable loan to pull off this deal.  But good of you to point out that Pace is a friend of TiVo, so I'm also curious to know how that might factor into such a deal. JB


 

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