Google doesn’t actually have to make money on its Motorola-brand smartphones
“A year from now, would you purchase an iPhone 6 for $200 if you could get a Google-Motorola Droid 5 smartphone for $50-100 with a 2-year plan from AT&T or Verizon?”
So begins an intriguing thought experiment conducted by the team at Trefis, the stock analysis firm that breaks down companies’ stock prices based on the contributions of their major products and businesses.
For Google GOOG , that’s pretty straightforward. According to its latest quarterly report, 97% of the company’s revenue came from Web advertising. So when Trefis analyzes the company’s share price, currently around $540, the only other factor to consider is the $40 billion or so Google had in cash and marketable securities before it agreed to spend $12.5 billion buying Motorola Mobility MMI .
What does all this mean for Apple AAPL ? Here’s what Trefis says:
It may not be that simple. For example, how would Google’s other partners — Samsung, HTC, LG and the rest — feel about being undercut by a company-owned manufacturing arm? And how would the Justice Department’s antitrust division feel about Google using its search revenue to subsidize a takeover of smartphone manufacturing?
These are problems that could prove too knotty even for the brainiacs that run Google. That’s why some analysts think Larry Page’s plan may be to hold on to Motorola’s patents and either sell the manufacturing division or shut it down.