Daily Archives: January 7, 2010

Mystery Surrounds Acquisitions by Motorola’s Home and Networks Mobility Business

In November, the Wall Street Journal published an article quoting sources who said Motorola was preparing to sell its home and networks mobility business for as much as $5 billion.

Since then, as noted by Billing and OSS World, Motorola has not been behaving as though it’s inclined to sell the business, which is its largest. To the contrary, Motorola has gone on an acquisitive tear, buying three small companies that are being folded into the group.

The latest purchase involves SecureM, LLC and its wholly owned subsidiaries, which together operate as SecureMedia, a developer of software-based digital rights management (DRM) and security systems for IP video distribution and management. SecureMedia develops and markets software systems for securing the distribution of digital entertainment over multiple platforms to multiple devices, including set-top boxes, wireless handsets, PCs, and portable entertainment devices. Its products are apparently approved by all major film studios and TV broadcasters.

Quoted in a press release announcing the acquisition, John Burke, senior vice president of Motorola Home & Networks Mobility business, said the following:

“Motorola continues to invest in our video infrastructure solutions as our customers evolve their networks to handle the explosion in consumer demand for video. SecureMedia has superior expertise in IP-based video security and digital rights management — critical capabilities for the emerging Internet Era of Television, where video content is mobilized across the three screens of TV, mobile phone and PC.”

As with the two preceding acquisitions — of Israel-based BitBand, involved in content-delivery networking and IPTV, and RadioFrame Networks’ iDEN business — terms were not disclosed. Doubtless these were not bank-breaking transactions, but one wonders how they are consistent with Motorola’s reported desire to sell the business into which they are being integrated.

It’s certainly possible, as I mentioned in a previous blog post, that Motorola might intend to sell the business in pieces, with part of it to be sold earlier to one buyer and the rest to be kept or sold later to a different acquirer.

The report that appeared in the Wall Street Journal was relatively detailed, with sources providing the identities of prospective acquirers and the names of the investment banks, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., said to be advising Motorola on the sale. I suspect there was some fire behind the smoke, but it’s difficult to know whether we’re dealing with a cigar stub in a wastebasket or a five-alarm blaze.

One presumes there’s some method behind the ostensible madness, so stay tuned.

Google Energy Open to Interpretation

Google isn’t on the cusp of entering the electricity business, but in forming Google Energy, a Delaware-based subsidiary, and requesting regulatory permission to buy and sell electricity on the wholesale market, the search giant has signaled more than a hobbyist’s interest in the energy industry.

The official story from Google headquarters is that Google Energy has sought regulatory approval from the Federal Energy Regulatory Commission (FERC), the agency with oversight over the power grid, because of the parent company’s desire to have flexibility in pursuing its corporate goal of carbon neutrality.

Quoted by Martin LaMonica of CNET News’ Green Tech, Google spokesperson Niki Fenwick explained:

“Right now, we can’t buy affordable, utility-scale, renewable energy in our markets. We want to buy the highest quality, most affordable renewable energy wherever we can and use the green credits.”

I don’t doubt this is Google’s near-term objective. In the long run, well, anything is possible, even Google as an energy purveyor.

Google retains a longstanding interest in energy-efficient computing, particularly in its immense data centers, where savings from reduced energy consumption have the potential to deliver favorable results to the bottom line. With a 1.6-megawatt solar installation at its headquarters in Mountain View, Calif., Google already produces energy to support its operations. Clearly, as its application to FERC attests, it would like to do more, on its own and through the purchase of low-cost, utility-grade electricity on the open market.

In this context, Google’s corporate goal is carbon neutrality. If it attains that objective, though, would Google consider something more ambitious, taking it into the realm of serving the energy requirements of others?

At this point, Google says it doesn’t have “concrete plans” for its energy subsidiary, but that it wants “the ability to buy and sell electricity in case it becomes part of our portfolio.”

That could happen, as Katie Fehrenbacher writes at earth2tech. She cites a New York Times interview with Bill Weihl, Google’s energy guru (yes, that’s what he’s called), who admits to ambiguity about what the future holds for his employer.

Will Google’s Sweetened Bid for On2 Close the Deal?

Here and elsewhere, On2 shareholders dissatisfied with Google’s takeover offer for the video-compression company have campaigned against the proposed acquisition.

They’ve actually done more than that, alleging improper and untoward conduct by On2 principals and board members, some of whom were deemed to have gotten too cozy with Google and not open enough to offers from other potential acquirers.

It has been an ugly episode, for On2 and for Google, which never misses an opportunity to burnish its self-proclaimed corporate image as a non evildoer. While it hasn’t been established that Google perpetrated any dubious deeds in the context of its pursuit of On2, the ensuing charges and countercharges were unedifying. It could have gone better, and perhaps it would have done if Google had made a higher offer at the onset.

Figuring that late is better than never, Google has decided to sweeten its bid for On2. In what it described today as its “final offer,” Google proposes to give On2 stockholders an extra 15 cents in cash for every On2 share they hold, plus the originally proposed exchange of 0.001 shares of Google Class A common stock for each share of On2 stock.

Said On2 and Google in a statement:

“By increasing the consideration offered to On2′s stockholders by an additional $0.15 per share in cash, On2′s stockholders will receive additional value for their On2 common stock that Google and On2 believe better reflects the value that On2′s stockholders would have received had the acquisition closed closer to the time of its announcement in August 2009. This increase in the consideration that Google is offering to On2′s stockholders constitutes Google’s final offer.”

With the modified terms in effect, the deal would be worth about $134 million, up 20 percent on an initial arrangement valued at about $107.4 million. A large number of On2 shareholders weren’t happy with that offer — or how it came about — and they rebuffed it forcefully, compelling the company to twice postpone a shareholder meeting designed to confer official approval on the deal.

The company’s board, which has approved of the sale to Google all along, recommends acceptance of the revised bid. Shareholders will have an opportunity to pass judgment on the deal at a meeting on February 17.

Will they be favorably disposed to the sweetened offer? Will this meeting, unlike the other ones, actually take place? I’d like to hear directly from On2 shareholders, especially those — and there were many of them — who were opposed to the initial bid.