Google's acquisition of Motorola Mobility for $12.5 billion has shed light on a few of the company's thought processes, including precisely how much it thinks a patent is worth.
A beady-eyed analyst at Frost & Sullivan noticed an interesting link between the bid from CPTN Holdings of $450 million for a portfolio of patents from Novell owner Attachmate, and the $12.5 billion Google has just sunk into Motorola: the value per patent.
The purchase of Novell's 882 patents by a consortium of companies including Microsoft and Apple, which came as a mere portfolio buy and didn't result in them owning any portion of Novell or its parent company Attachmate, works out to $510,204.08 per patent, the analyst notes in a commentary released earlier this week.
Motorola Mobility's bid is significantly higher, but the company also owns significantly more patents: including pending patents and registered applications, Motorola's portfolio is 24,500 strong. Google's $12.5 billion purchase price - a 63 per cent hike over the company's previous trading price, which is a premium many in the financial markets are still scratching their heads over - equates to $510,204.08 per patent, or precisely the same as the Novell deal.
"In the Motorola acquisition," the unnamed analyst wryly notes, "Google bought a patent portfolio and got a mobile phone business thrown in free."
The figures would appear to show that Google is allowing others to dictate the value of a patent portfolio, looking towards the successful bid by CPTN Holdings on the Novell portfolio to figure out how much it should offer Motorola for its own patents.
While that's not the most complex approach the financial world has ever seen, it's significantly more impressive - and, dare we say, mature - than Google's previous efforts. When the company was bidding for wireless patents held by Nortel Networks, it offered bizarrely precise figures such as $1,902,160,540, $2,614,972,128, and $3,141,590,000.
Far from being the result of an algorithm comparing previous auction prices on a per-patent basis, Google's bids turned out to be mathematical jokes, taking their values from the distance between the Earth and the sun, Brun's constant - the number obtained by adding the reciprocals of the odd twin primes - Mertens constant, and pi - suggesting a somewhat ridiculous approach to spending a few billion dollars of stockholders' money.
While many in the financial world might scoff at Google's approach to valuing Motorola Mobility, few would argue that it's a more ridiculous way of going about it than plucking funny numbers out of the air.