JoshPritchard

eh, sorry for the typos. I’ve found at least two right after posting. I meant to say this “is horrendously” flawed analysis, and later I meant “Google closing the deal today …”, not “Google closely the deal today …”

this horrendously flawed analysis.

And see my comment about the tax assets and taking their NPV.

The problem for people trying to do an analysis after just getting an inch-deep into the numbers is that you totally miss the tax assets, since MMI carried a valuation markdown of $2.3B… all fun accounting stuff to learn for those trying to truly understand the impact as a Google shareholder.

For instance, I’m pretty sure Google closely the deal today means that it’ll be instantly accretive to their Q2 EPS….

There are significant tax assets for Google as well, from MMI’s years of NOLs. These are very real assets, and equate to $1B to Google in 2012, then $700M annually through 2019.
So, the tax assets are actually a big deal and almost everyone discussing this deal seems to be totally unaware of their impact. $!B in 2012 then $700M annually through 2019 is quite meaningful. Combined with the $3B in cash, the NPV of the tax assets offsets more than half of the headline acquisition price — bringing it to sub $6B. Compare ~6B net of cash and tax assets for the two operating businesses (the STB is profitable) and 17K patents + 7.5K pending with $4.5B paid by Apple et al for Nortel’s 6K patents alone.

Yeah, the tax assets are actually a big deal and almost everyone discussing this deal seems to be totally unaware of their impact. $!B in 2012 then $700M annually through 2019 is quite meaningful. Combined with the $3B in cash, the NPV of the tax assets offsets more than half of the headline acquisition price — bringing it to sub $6B. Compare ~6B net of cash and tax assets for the two operating businesses (the STB is profitable) and 17K patents + 7.5K pending with $4.5B paid by Apple et al for Nortel’s 6K patents alone.