Motorola Is Becoming Google's Surface

Motorola Is Becoming Google's Surface Oct 18th 2013, 17:58, by Alex Wilhelm Motorola isn’t doing very well as a part of Google. In Google’s most recently reported quarter, Motorola garnered revenue of $1.18 billion. Not a small number, but a mere 8% of its parent company’s consolidated revenue. And, in the comparable third quarter of 2012, its revenue totaled $1.78 billion. That’s a decline of 34% in a year, even with Motorola launching its much-hyped Moto X smartphone. That’s only half the picture, however, as Motorola loses quite a lot of money: $248 million in the quarter. Google sums this well, noting that the loss was “-21% of Motorola Mobile segment revenues.” Motorola lost $192 million in the year-ago quarter, so the trend here isn’t positive. However, Motorola costs Google in other ways as well. Google recorded an amortization expense relating to Motorola of $153 million in the quarter. However, only $37 million of that sum was incorporated into Motorola’s results, so the net impact of Motorola onto Google’s quarter is in fact larger than it first appears. Huge losses? Disappointing revenue? An albatross attempt to break into the OEM market, competing with its own platform partners? Motorola is Google’s Surface. Before you Microsoft fans bend a fan blade, note that I’m comparing the current state of Motorola to the past of Surface. It is far from certain that the new line of Surface devices will be overproduced as the first generation was, something that led to a massive writedown. Still, watching two large platform companies struggle financially (not that they can’t stomach the losses) with their hardware projects is something worth comparing. The difference, of course, is that Google spent $12 billion buying Motorola, while Microsoft has certainly spent and loss less than that with Surface, before we even begin to include Motorola’s continued financial losses. At what level of loss and low revenue does Google pull the plug?