Part of those litigation costs are offensive, and have already resulted in preliminary injunctions in Germany against multiple Apple entities. I’m sure Motorola & Google are hoping these injunctions are a preview of whats to come from the pending Motorola v Apple cases in the US.

More generally, though, there is also substantial value in the cash and tax assets that the media seems to be stubbornly ignoring. Motorola has over $3B in tax assets from NOLs that Google will be able to take advantage of (easily missed since MMI carries a valuation allowance to offset it). Motorola also has 3.4B in cash as of Q3. 

Motorola has two distinct business units, and the STB unit is actually profitable and has shown consistent margin improvement. The STB business consistently generates $3.5-5B in annual sales  (depending on timing of cable provider upgrade cycle). If the business unit was valued very conservatively at .5x sales, that’d be ~$2B. 

Before assigning any value to the mobile device business or the patents, that’s ~$8-$8.5B in assets across cash, tax assets, and the consistently profitable STB business (which has ~60% mkt share). 

That leaves $4B in value to account for in order for Google to have gotten a reasonable price. 

Given the $4.5B that Apple et al paid for the Nortel package, and that fact that Motorola’s IP portfolio is actually far larger and more robust than Nortel’s, it’s pretty easy to argue that the patents alone account for the full $4B gap left after summing the cash, tax assets, and STB business, but before assigning any value to the mobile device business. 

From this point, one could argue Google is essentially getting the mobile device business, which does $10B in annual sales, for nothing.