The good news is that Google’s Motorola division has contributed quite a hefty chunk of change to Google’s base revenue. In fact, Motorola raked in $1.25 billion in revenue for the quarter that ended last June 30. This is quite a nice chunk of change since it represents about a tenth of Google’s total revenues. The bad news is that Motorola also posted an operating loss of $233 million. This dragged down Google’s total operating income by 6 percentage points as a percent of its total revenue. All told, Google’s total sales amounted to $12.21 billion for the second quarter compared to the revenue of $9.02 billion posted a year earlier.
Google revealed all this information at a recent investor conference call. Analysts were asking Google executives if it saw any changes the company might make over at its Motorola division. The Google executive at the conference call said that everybody should expect Google to make some changes at Motorola. Apparently Google is in the process of checking out every division and analyzing the company for possible changes. It is expected that Google would be making changes to Motorola.
It is not a hardware company just yet, and Motorola is a full company with many divisions and many components that might not fit Google’s overall strategy. The question is really not whether there would be changes or even cuts or sales, but which one. There are probably a couple of chunks in the company’s overall management and operational structure that could be sold off or merged with other companies or push to other parts of Google. The key question is which ones would be retained. As we have reported earlier, Google’s choice for the top leadership of Motorola revealed the sales orientation that they see for their newly acquired company. It would be very interesting to see how Google’s internal strategy for Motorola has changed now that the Nexus 7 tablet is a reality and the possibility of Google also becoming a hardware company becomes less and less absurd. Of course, the 800-pound gorilla in the room is whether Motorola can help Google make a head way into Android sales. Currently Google makes money from Android only if users use the OS to get on the internet and do some searches or pull up Google ads. This is really just an extension of Google’s web ads strategy. It still remains to be seen whether Google can make money directly from the Android system integration into mobile devices. Considering how fast tablets and other mobile devices are proliferating, that truly is the area where Google’s greatest opportunities for revenue growth lie.