GOOGLE AND MOTOROLA: ROAD AHEAD Google announced in august 2011 that it will acquire Motorola Mobility for

$12.5 billion in order to "supercharge" its Android mobile operating system and build up its patent portfolio. Google chief Larry Page insisted the acquisition will not change Google's commitment to keeping Android open. "We will run Motorola as a separate business," he wrote. "Many hardware partners have contributed to Androids success and we look forward to continuing to work with all of them to deliver outstanding user experiences." Andy Rubin, senior vice president of mobile at Google, echoed those sentiments. "We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community," Rubin said in a statement. "We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices." During a conference call, Rubin said he spoke with the "top five Android licensees" and "they all showed very enthusiastic support for the deal.""Android was born as an open platform," Rubin continued. "It doesn't make sense for it to be a single OEM. We want to go as wide as possible and all our partners make it what it is today." Perhaps more important to Google's bottom line will be the acquisition of Motorola Mobility's patent portfolio. "Our acquisition of Motorola will increase competition by strengthening Googles patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies," Page wrote. Google is picking up a venerable hardware vendor that has had some hits (Motorola Photon 4G) and some misses (Motorola Xoom). The move could also breathe new life into Google's stagnant Google TV platformMotorola is one of the largest manufacturers of set top boxes in the country. But focusing on Motorola's hardware properties is a mistake; this deal is really about intellectual property. To be sure, there are advantages to building your own hardware. Apple's ability to design, code, build, and even sell its products at retail have made it one of the most valuable tech companies in the world. When Google released products like the Nexus S, you can see the company appreciates the potential there. If this deal goes through, Motorola will become the exclusive builder of pure Android devices. This will bring Google some economies of scale and no doubt some better margins on the products it sells, but all this is secondary to acquiring Motorola's patents. The math is stark. Motorola has 17,000 patents, Google has about 1,000. As Googles CEO Larry Page said in a blog postannouncing the deal, "our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."Indeed, just a few weeks ago, Motorola Mobility Chairman Dr. Sanjay Jha boasted on an earnings call that its patent holdings separated it from the rest of the Android market."As most of you know, we own one of the strongest and most respected patent portfolios in the industry," Jha said. "We have over 17,000 patents granted and over 7,000 patents pending with particular strength in 2G and 3G essential, non-essential patents important to the delivery of competitive products in the marketplace, video particularly compression, decompression and security technologies and finally, a leading position in 4G LTE essential. Indeed, a growing number of analysts and investors have been pushing Motorola to be more aggressive with its patents and to start targeting other Android

vendors who are using its technology. Part of this is driven by the slow sales of its own products, but no one disputes that Motorola could do some damage if it went on the attack. Google, no doubt, will be much more flexible. At least when it comes to Android vendors. Despite Google's increasing influence on almost every aspect of our digital lives, it is relatively patent poor. A rich patent portfolio takes time to build and Google is relatively young company at 13. Both Apple and Microsoft have been exploiting this fact to go after Google and its hardware partners. Apple is suing HTC and Samsung for mimicking the "look and feel" of the iPhone. Both companies are countersuing Apple for their own claims. Likewise, Microsoft and Motorola Mobility also have open suits. Everyone, quite literally, is suing everyone. And until now, Google was the guy with a knife at a gunfight. Much more than a hardware play, this deal is about defending the Android platform from patent attacks. For most companies, $12.5 billion is a ridiculous price for patent protection, but remember Google has about $39 billion in cash on hand. With that kind of bank, it could keep shopping. (Eastman Kodak is reportedly putting 1,000 of its digital imaging patents up for sale.) The stunning $4.5 billion auction of Nortel patents won by Apple, Microsoft, and Research in Motion added fuel to this patent hunting craze. GOOGLE INC. Google (GOOG) is a global provider of targeted advertising technology and Internet search services. Google's technology organizes the internet to provided better information (pictures, text, videos and various media) search results for their users. Google's AdWords and Adsense programs enable advertisers to place advertisements on Google-supported sites. Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, advertising technologies, and search engines. Google hosts and develops a number of Internet-based services and products,[3] and generates profit primarily from advertising through its AdWords program. The company was founded by Larry Page and Sergey Brin, often dubbed the "Google Guys",[6][7][8] while the two were attendingStanford University as PhD candidates. It was first incorporated as a privately held company on September 4, 1998, and its initial public offering followed on August 19, 2004. At that time Larry Page, Sergey Brin, and Eric Schmidt agreed to work together at Google for twenty years, until the year 2024.[9] The company's mission statement from the outset was "to organize the world's information and make it universally accessible and useful",[10] and the company's unofficial slogan coined by Google engineer Amit Patel[11] and supported by Paul Buchheit is "Don't be evil".[12][13]In 2006, the company moved to its current headquarters inMountain View, California. It has been estimated that Google runs over one million servers in data centers around the world, [14] and processes over one billion search requests[15] and about twenty-four petabytes of usergenerated data every day.[16][17][18][19] Google's rapid growth since its incorporation has triggered a chain of products, acquisitions, and partnerships beyond the company's core web search engine. The company offers online productivity software, such as its Gmailemail service, and social networking tools, including Orkut and, more recently, Google Buzz and Google+. Google's products extend to the desktop as well, with applications such as the web browser Google Chrome, the Picasa photo organization and editing software, and the Google Talk instant

messaging application. Notably, Google leads the development of the Android mobileoperating system, used on a number of phones such as theMotorola Droid and the Samsung Galaxy smartphone series', as well as the new Google Chrome OS,[20] best known as the main operating system on the Cr-48 and also, since 15 June 2011, on commercial Chromebooks such as the Samsung Series 5[21] andAcer AC700.[22] Alexa lists the main U.S.-focused google.com site as the Internet's most visited website, and numerous international Google sites (google.co.in, google.co.uk etc.) are in the top hundred, as are several other Google-owned sites such as YouTube, Blogger, and Orkut.[23] Google also ranks number two in the BrandZ brand equity database.[24] The dominant market position of Google's services has led to criticism of the company over issues including privacy, copyright, and censorship. The first funding for Google was an August 1998 contribution ofUS$100,000 from Andy Bechtolsheim, co-founder of Sun Microsystems, given before Google was even incorporated. [48] Early in 1999, while still graduate students, Brin and Page decided that the search engine they had developed was taking up too much of their time from academic pursuits. They went to Excite CEO George Bell and offered to sell it to him for $1 million. He rejected the offer, and later criticized Vinod Khosla, one of Excite's venture capitalists, after he had negotiated Brin and Page down to $750,000. On June 7, 1999, a $25 million round of funding was announced,[49] with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.[48] Google's initial public offering (IPO) took place five years later on August 19, 2004. The company offered 19,605,052 shares at a price of $85 per share.[50][51] Shares were sold in a unique online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal.[52][53] The sale of $1.67 billion gave Google a market capitalization of more than $23 billion. [54] The vast majority of the 271 million shares remained under the control of Google, and many Google employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefited because it owned 8.4 million shares of Google before the IPO took place.[55] Some people speculated that Google's IPO would inevitably lead to changes in company culture. Reasons ranged from shareholder pressure for employee benefit reductions to the fact that many company executives would become instant paper millionaires.[56] As a reply to this concern, cofounders Sergey Brin and Larry Page promised in a report to potential investors that the IPO would not change the company's culture.[57] In 2005, however, articles in The New York Times and other sources began suggesting that Google had lost its anti-corporate, no evil philosophy.[58][59][60] In an effort to maintain the company's unique culture, Google designated a Chief Culture Officer, who also serves as the Director of Human Resources. The purpose of the Chief Culture Officer is to develop and maintain the culture and work on ways to keep true to the core values that the company was founded on: a flat organization with a collaborative environment.[61] Google has also faced allegations of sexism and ageism from former employees.[62][63] The stock's performance after the IPO went well, with shares hitting $700 for the first time on October 31, 2007,[64] primarily because of strong sales and earnings in the online advertising market.[65] The surge in stock price was fueled mainly by individual investors, as opposed to large institutional investors and mutual funds.[65]The company is now listed on the NASDAQ stock exchange under the ticker symbol GOOG and under theFrankfurt Stock Exchange under the ticker symbol GGQ1. Growth

In March 1999, the company moved its offices to Palo Alto, California, home to several other noted Silicon Valley technology startups.[66] The next year, against Page and Brin's initial opposition toward an advertising-funded search engine,[67] Google began selling advertisements associated with search keywords.[28] In order to maintain an uncluttered page design and increase speed, advertisements were solely text-based. Keywords were sold based on a combination of price bids and click-throughs, with bidding starting at five cents per click.[28] This model of selling keyword advertising was first pioneered by Goto.com, an Idealab spin-off created by Bill Gross.[68] [69] When the company changed names to Overture Services, it sued Google over alleged infringements of the company's pay-per-click and bidding patents. Overture Services would later be bought by Yahoo! and renamed Yahoo! Search Marketing. The case was then settled out of court, with Google agreeing to issue shares of common stock to Yahoo! in exchange for a perpetual license.[70] During this time, Google was granted a patent describing its PageRank mechanism.[71] The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor. In 2003, after outgrowing two other locations, the company leased its current office complex from Silicon Graphics at 1600 Amphitheatre Parkway in Mountain View, California.[72] The complex has since come to be known as the Googleplex, a play on the word googolplex, the number one followed by a googol zeroes. Three years later, Google would buy the property from SGI for $319 million. [73] By that time, the name "Google" had found its way into everyday language, causing the verb "google" to be added to the Merriam Webster Collegiate Dictionary and the Oxford English Dictionary, denoted as "to use the Google search engine to obtain information on the Internet."[74]
[75]

Acquisitions and partnerships Since 2001, Google has acquired many companies, mainly focusing on small venture capital companies. In 2004, Google acquired Keyhole, Inc.[76] The start-up company developed a product called Earth Viewer that gave a 3-D view of the Earth. Google renamed the service to Google Earth in 2005. Two years later, Google bought the online video site YouTube for $1.65 billion in stock.[77] On April 13, 2007, Google reached an agreement to acquire DoubleClick for $3.1 billion, giving Google valuable relationships that DoubleClick had with Web publishers and advertising agencies.[78] Later that same year, Google purchased GrandCentral for $50 million.[79] The site would later be changed over to Google Voice. On August 5, 2009, Google bought out its first public company, purchasing video software maker On2 Technologies for $106.5 million.[80] Google also acquired Aardvark, a social network search engine, for $50 million, and commented on its internal blog, "we're looking forward to collaborating to see where we can take it".[81] In April 2010, Google announced it had acquired a hardware startup, Agnilux.[82] In addition to the many companies Google has purchased, the company has partnered with other organizations for everything from research to advertising. In 2005, Google partnered with NASA Ames Research Center to build 1,000,000 square feet (93,000 m2) of offices.[83] The offices would be used for research projects involving large-scale data management, nanotechnology, distributed computing, and the entrepreneurial space industry. Google entered into a partnership with Sun Microsystems in October 2005 to help share and distribute each other's technologies.[84] The company also partnered with AOL of Time Warner, [85] to enhance each other's video search services. Google's 2005 partnerships also included financing the new .mobi top-level domain for mobile devices, along with other companies including Microsoft, Nokia, and Ericsson.[86] Google would later launch "Adsense for Mobile",

taking advantage of the emerging mobile advertising market.[87] Increasing its advertising reach even further, Google and Fox Interactive Media of News Corporation entered into a $900 million agreement to provide search and advertising on popular social networking site MySpace.[88] In October 2006, Google announced that it had acquired the video-sharing site YouTube for US$1.65 billion in Google stock, and the deal was finalized on November 13, 2006.[89] Google does not provide detailed figures for YouTube's running costs, and YouTube's revenues in 2007 were noted as "not material" in a regulatory filing.[90]In June 2008, a Forbes magazine article projected the 2008 YouTube revenue at US$200 million, noting progress in advertising sales.[91] In 2007, Google began sponsoring NORAD Tracks Santa, a service that follows Santa Claus' progress on Christmas Eve,[92] using Google Earth to "track Santa" in 3-D for the first time,[93] and displacing former sponsor AOL. Google-owned YouTube gave NORAD Tracks Santa its own channel.[94] In 2008, Google developed a partnership with GeoEye to launch a satellite providing Google with high-resolution (0.41 m monochrome, 1.65 m color) imagery for Google Earth. The satellite was launched from Vandenberg Air Force Base on September 6, 2008.[95] Google also announced in 2008 that it was hosting an archive of Life Magazine's photographs as part of its latest partnership. Some of the images in the archive were never published in the magazine.[96] The photos were watermarked and originally had copyright notices posted on all photos, regardless of public domain status.[97] In 2010, Google Energy made its first investment in a renewable-energy project, putting $38.8 million into two wind farms in North Dakota. The company announced the two locations will generate 169.5 megawatts of power, or enough to supply 55,000 homes. The farms, which were developed by NextEra Energy Resources, will reduce fossil fuel use in the region and return profits. NextEra Energy Resources sold Google a twenty percent stake in the project to get funding for its development.[98] Also in 2010, Google purchased Global IP Solutions, a Norway-based company that provides web-based teleconferencing and other related services. This acquisition will enable Google to add telephone-style services to its list of products. [99] On May 27, 2010, Google announced it had also closed the acquisition of the mobile ad network AdMob. This purchase occurred days after the Federal Trade Commission closed its investigation into the purchase. [100] Google acquired the company for an undisclosed amount.[101] In July 2010, Google signed an agreement with an Iowa wind farm to buy 114 megawatts of energy for 20 years.[102] On April 4, 2011, The Globe and Mail reported that Google bid $900 million for six thousand Nortel Networkspatents.[103] On August 15, 2011, Google announced that it would acquire Motorola Mobility for $12.5 billion[104][105] subject to approval from regulators in the United States and Europe. In a post on Google's blog, Google Chief Executive and co-founder Larry Page revealed that Google's acquisition of Motorola Mobility is a strategic move to strengthen Google's patent portfolio. The company's Android operating system has come under fire in an industry-wide patent battle, as Apple and Microsoft have taken to court Android device makers such as HTC, Samsung and Motorola.[106] This purchase was made in part to help Google gain Motorola's considerable patent portfolio on mobile phones and wireless technologies to help protect it in its ongoing patent disputes with other companies,[107] mainly Apple and Microsoft[106] and to allow it to continue to freely offer Android

Table 1: GOOGLE Calculation to Find the Industry Average Estimates for the WACC Calculation (Millions USD) WACC Inputs Risk Free Rate Cost of Debt Equity Risk Prem Alpha Country Risk Premium Industry WACC Calculation Beta (unlevered) Industry D/E Tax Rate (5 yrs) Beta (relevered) Cost of Debt (after-tax) Debt / Capital WAC (debt) Cost of Equity (capm) Equity / Capital WAC (equity) WACC Conclusion 4.5 % 6.7 % 5.0 % 0.0 % 0.0 % 1.09 8.3 % 26.0 % 1.15 5.0 % 7.6 % 0.4 % 10.3 % 92.4 % 9.5 % 9.9 %

Table 2: GOOGLE Calculation to Find the Industry Average Estimates for the WACC Cal culation (Millions USD) Name Beta Debt Debt Beta Pric lever Debt Shar Equity Capita Equi Capit Tax %unlev e ed es l ty al er

Google Yahoo! Microsoft Time Warner Baidu.com

Sun Microsystems IBM $16 0.73 28,75 6 0 Apple $37 1.36 0 4 News Corp $17 1.51 13,74 8 Nokia $6 1.58 10,16 0 Deutsche $15 0.68 55,55 Telekom 8 Median (middl e #)

$52 1.17 3,465 322 0 $13 0.88 181 1,30 9 $25 1.05 5,939 8,40 2 $29 1.12 16,55 1,08 4 2 $13 1.72 13 348 3 $- 1.78 0

167,5 20 16,85 2 206,4 47 31,60 9 46,38 1

170,9 85 17,03 3 212,3 86 48,16 3 46,39 4

2.1 2.0% % 1.1 1.1% % 2.9 2.8% % 52.4 34.4 % % 0.0 0.0% % 14.2 12.5 % % 0.0 0.0% % 31.7 24.1 % % 45.4 31.2 % % 87.0 46.5 % %

26.0 % 35.0 % 28.8 % 24.7 % 15.0 % 0.0% 29.0 % 30.3 % 38.9 % 16.1 % 14.2 %

1.15 0.87 1.03 0.80 1.72

1,22 201,9 230,6 0 31 81 925 345,5 345,5 99 99 2,62 43,36 57,11 5 5 3 3,79 22,37 32,53 9 8 7 4,30 63,85 119,4 0 5 13

0.66 1.36 1.27 1.14 0.39

1.17 5,939 1,26 55,11 88,26 8.6 7.6% 26.0 1.09 4 8 3 % %

TABLE 3: GOOGLE- OPERATING PROFIT

TABLE 4:GOOGLE- FREE CASH FLOW ANALYSIS

TABLE 5: GOOGLE COMPARATIVE valuation

Table 6: GOOGLE - ADDITIONAL FINANCIALS

MOTOROLA MOBILITY MMI Motorola, Inc. designs, manufactures, and markets wireless and broadband communication products worldwide. Motorala's primary business concerns mobile phones, which incorporate cutting edge technology with a range of features.

Motorola, Inc. motorola was an Americanmultinational[6] telecommunications company based inSchaumburg, Illinois, which was eventually divided into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011, after losing $4.3 billion from 2007 to 2009.[7] Motorola Solutions is generally considered to be the direct successor to Motorola, Inc., as the reorganization was structured with Motorola Mobility being spun off.[8] Motorola designed and sold wireless network infrastructure equipment such as cellular transmission base stations and signal amplifiers. Motorola's home and broadcast network products included set-top boxes, digital video recorders, and network equipment used to enable video broadcasting, computer telephony, and high-definition television. Its business and government customers consisted mainly of wireless voice and broadband systems used to build private networks and public safety communications systems like Astro and Dimetra. These businesses (except for set-top boxes and cable modems) are now part of Motorola Solutions. Motorola's wireless telephone handset division was a pioneer in cellular phones. Known as the Personal Communication Section (PCS) prior to 2004, it pioneered the flip phone with theStarTAC in the mid-1990s, and it enjoyed a resurgence with the RAZR in the mid-2000s before losing significant market share. Lately it has focused on smartphones using Google's opensource Android mobile operating system. The first phone to use the newest version of Google's open source OS, Android 2.0, was released on November 2, 2009 as the Motorola Droid(the GSM version launched a month later, in Europe, as the Motorola Milestone). The handset division, (along with cableset-top boxes and cable modems) has since then been spun off into the independent Motorola Mobility. Motorola started in Chicago, Illinois as Galvin Manufacturing Corporation (at 847 West Harrison Street)[9] in 1928, with its first product being a battery eliminator. Paul Galvin purchased the patents to the automotive radio and acquired the rights to the trade name Motorola ("motor" and "Victrola") from William Lear[citation needed]. The name Motorola was adopted in 1930, and the word has been used as a trademark since the 1930s.[10] Many of Motorola's products have been radio-related, starting with a battery eliminator for radios, through the first walkie-talkie in the world in 1940,defense electronics, cellular infrastructure equipment, and mobile phone manufacturing. In the same year, the company built its research and development program with Dan Noble, a pioneer in FM radio and semiconductor technologies joined the company as director of research. In 1943, Motorola went public and in 1947, the name changed to its present name. At this time, Motorola's main business was producing and selling televisions and radios. Motorola produced the hand-held AM SCR-536 radio during World War II which was vital to allied communication. In 1946 (October) - first "car phone" - Motorola communications equipment carried the first calls on Illinois Bell Telephone Company's new car radiotelephone service in Chicago, Illinois, USA. In 1952, Motorola opened its first international subsidiary in Toronto, Canada to produce radios and televisions. In 1953, Motorola established the Motorola Foundation to support leading universities in the United States. In 1955, years after Motorola started its research and development laboratory in Phoenix, Arizona to research new solid-state technology, Motorola introduced the world's first commercial highpower germanium-basedtransistor. The present "batwing" logo was also introduced in 1955 (having been created by award-winning Chicago graphic designer Morton Goldsholl in late 1954).

Beginning in 1958 with Explorer 1, Motorola provided radio equipment for most NASA spaceflights for decades including during the 1969 moon landing. A year later, it established a subsidiary to conduct licensing and manufacturing for international markets. In 1960, Motorola introduced the world's first "large-screen" (19-inch), transistorized, cordless portable television. In 1963, Motorola, which had very successfully begun making televisions in 1947 introduced the world's first truly rectangular color TV. The tube, developed in a joint venture with National Video Corporation picture tubequickly became the industry standard. In 1969, Neil Armstrong spoke the famous words "one small step for [a] man, one giant leap for mankind" from the Moon on a Motorola transceiver.[11] In 1973, Motorola Demonstrates Portable Telephone to be Available for Public Use by 1976.[12] In 1974, Motorola sold its television business to the Japan-based parent company of Panasonic. In 1976, Motorola moved to its present headquarters in Schaumburg, Illinois. In September 1983, the firm made history when the U.S. Federal Communications Commission (FCC) approved the DynaTAC 8000X telephone, the world's first commercial cellular device. By 1998, cellphones accounted for two thirds of Motorola's gross revenue.[13] The company was also strong in semiconductor technology, including integrated circuits used in computers. In particular, it is well known for the 6800 family and 68000 family of microprocessors used in Atari ST, Commodore Amiga, Color Computer, and Apple Macintoshpersonal computers. The PowerPC family was developed with IBM and in a partnership with Apple (known as the AIM alliance). Motorola also has a diverse line of communication products, including satellite systems,digital cable boxes and modems. In 1986, Motorola invented the Six Sigma quality improvement process. This became a global standard. In 1990, General Instrument Corporation, which was later acquired by Motorola, proposed the first all-digital HDTVstandard. In the same year, the company introduced the Bravo numeric pager which became the world's best-selling pager. In 1991, Motorola demonstrated the world's first working-prototype digital cellular system and phones usingGSM standard in Hanover, Germany. In 1994, Motorola introduced the world's first commercial digital radio system that combined paging, data and cellular communications and voice dispatch in a single radio network and handset. In 1995 Motorola introduced the world's first two-way pager which allowed users to receive text messages and e-mail and reply with a standard response. In 1998, Motorola was overtaken by Nokia as the world's biggest seller of mobile phone handsets. [11] On September 15, 1999, Motorola announced it would buy General Instrument in an $11 billion stock swap. General Instrument had long been the No. 1 cable TV equipment provider, supplying cable operators with end-to-end hybrid fiber coax cable solutions. This meant that GI offers all cable TV transmission network components from the head-end to the fiber optic transmission nodes to the cable set-top boxes, now at the availability of Motorola. In June 2000, Motorola and Cisco supplied the world's first commercial GPRS cellular network to BT Cellnet in the United Kingdom. The world's first GPRS cell phone was also developed by Motorola. In 2002, Motorola introduced the world's first wireless cable modem gateway which combined a high-speed cable modem router with an ethernet switch and wireless home gateway. In 2003, Motorola introduced the world's first handset to combine a Linux operating system and Java technology with "full PDA functionality".

In June 2006, Motorola acquired the world-class software platform (AJAR) developed by the British company TTP Communications plc.[14] In 2006, the firm announced a music subscription service named iRadio. The technology came after a break in a partnership with Apple Computer (which in 2005 had produced an iTunes compatible cell phone ROKR E1, and most recently, mid 2007, its own iPhone). iRadio has many similarities with existing satellite radio services (such as Sirius and XM Radio) by offering live streams of commercial-free music content. Unlike satellite services, however, iRadio content will be downloaded via a broadband internet connection. As of 2008, iRadio has not been commercially released and no further information is available.[15] In 2007, Motorola acquired Symbol Technologies, Inc. to provide products and systems for enterprise mobility solutions, including rugged mobile computing, advanced data capture and radio frequency identification (RFID). In August 2011, Google announced that it will purchase Motorola Mobility for about $12.5 billion. [16] Motorola creates numerous products for use by the government, public safety officials, business installments, and the general public. These products include cell phones, laptops, computer processors, and radio communication devices. The Motorola RAZR line has sold over 120 million units bringing the company to the number two mobile phone slot in 2005. Since the 1950s, used Motorola radio equipment has been popular with amateur radio ("ham") operators. Known as "Ma Batwings," Motorola has provided little to no support to hobbyists, who keep using these radios for years or even decades after they were taken out of production. Divisional Products:[17] Enterprise Mobility Solutions: Headquarters located in Schaumburg, Illinois; comprises communications offered to government and public safety sectors and enterprise mobility business. Motorola develops analog and digital two-way radio, voice and data communications products and systems, mobile computing, advanced data capture, wireless infrastructure and RFID solutions to customers worldwide. Home & Networks Mobility: Headquarters located in Arlington Heights, Illinois; produces end-to-end systems that facilitate uninterrupted access to digital entertainment, information and communications services via wired and wireless mediums. Motorola develops digital video system solutions, interactive set-top devices, voice and data modems for digital subscriber line and cable networks, broadband access systems for cable and satellite television operators, and also wireline carriers and wireless service providers. Mobile Devices: Headquarters located in Libertyville, Illinois; currently the least prosperous arm of the firm; designs wireless handsets, but also licenses much of its intellectual properties. This includes cellular and wireless systems and as well as integrated applications and Bluetooth accessories.
Finances

Motorola's handset division recorded a loss of US$1.2 billion in the fourth quarter of 2007, while the company as a whole earned $100 million during that quarter.[18] It lost several key executives to rivals,[19] and the web siteTrustedReviews called the company's products repetitive and uninnovative.[20] Motorola laid off 3,500 workers in January 2008,[21] followed by a further 4,000 job cuts in June[22] and another 20% cut of its research division a few days later.[23] In July 2008 a large number of executives left Motorola to work on Apple Inc.'s iPhone.[24]The company's handset division was also put on offer for sale.[25] Also that month, analyst Mark

McKechnie from American Technology Research said that Motorola "would be lucky to fetch $500 million" for selling its handset business. Analyst Richard Windsor said that Motorola might have to pay someone to take the division off the company's hands, and that Motorola may even exit the handset market altogether.[26] Its global market share has been on the decline; from 18.4% of the market in 2007 the company had a share of just 6.0% by Q1 2009, but at last Motorola scored a profit of $26 million in Q2 and showed an increase of 12% in stocks for the first time after losses in many quarters. During the second quarter of 2010, the company reported a profit of $162 million, which compared very favorably to the $26 million earned for the same period last year. Its Mobile Devices division reported, for the first time in years, earnings of $87 million.[27]
TABLE 7: MMI-MOTOROLA MOBILITY Industry Average Estimates for the WACC Calculation (Mn USD) WACC Inputs

Risk Free Rate Cost of Debt Equity Risk Prem Alpha Country Risk Premium Industry WACC Calculation Beta (unlevered) Industry D/E Tax Rate (5 yrs) Beta (relevered) Cost of Debt (after-tax) Debt / Capital WAC (debt) Cost of Equity (capm) Equity / Capital WAC (equity) WACC Conclusion

4.5% 6.7% 5.0% 0.0% 0.0% 1.14 14.0% 25.0% 1.26 5.0% 12.3% 0.6% 10.9% 87.7% 9.5% 10.2%

TABLE 8: MMI-MOTOROLA MOBILITY Industry Average Estimates for the WACC Calculation (Mn USD) Beta Debt Debt Beta Name Motorola Mobility Nokia Cisco Alcatel-Lucent QUALCOMM Price levered Debt Shares Equity Capital Equity Capital Tax % unlever

$38 1.85 $6 1.58

$15 1.22 $3 2.47

$47 0.97

29511,164 11,283 1.1% 1.1% 25.0 % 10,16 3,79922,378 32,537 45.4 31.2 16.1 0 % % % 15,30 5,73286,439 101,74 17.7 15.0 23.0 2 1 % % % 6,038 2,319 7,630 13,668 79.1 44.2 0.0% % % 1,086 1,67078,385 79,471 1.4% 1.4% 18.7 %

119

1.84 1.14 1.07 1.38 0.96

Research In Motion Nortel Ntks LM Ericsson Microsoft Siemens Powerwave Median (middle #)

$28 1.90

52414,789 14,789 0.0% 0.0% 28.1 1.90 %

$11 1.06 4,826 3,27334,436 39,261 14.0 12.3 30.8 0.97 % % % $25 1.05 5,939 8,402 206,44 212,38 2.9% 2.8% 28.8 1.03 7 6 % $10 1.58 28,20 91491,749 119,95 30.7 23.5 29.9 1.30 0 9 9 % % % 1.58 5,939 2,31934,436 39,261 14.0 12.3 25.0 1.14 % % %

Table 8: MMI- OPERATING PROFITS

Table 9: MMI- CASH FLOW VALUATION

TABLE 10 : MMI- COMPARATIVE MULTIPLE VALUATION

TABLE 11 : MMI- ADDITIONAL FINNACIALS