‘Googorola’ close to closing

Contact: Brenon Daly

In what could be its last financial report before it is formally acquired by Google, Motorola Mobility said after the closing bell Thursday that mobile device revenue in the third quarter rose 20% over the same period last year to $2.4bn. That was nearly twice the overall rate of growth at the company in the quarter, although it was a slower rate than the mobile device division had grown in earlier quarters this year.

The main drag on the unprofitable division was anemic sales of its Xoom tablet, with the company indicating that it shipped just 100,000 units in the quarter. That’s just half the number it shipped in Q1 and one-quarter the number it shipped in Q2. But Motorola Mobility did manage to ship more smartphones in the just-completed quarter (4.8 million) than it did in either of the two previous quarters.

And once Google does assume ownership of the company, it may well see a slight bump in demand for those devices, at least according to a finding by our ChangeWave Research division. In late September, ChangeWave asked more than 4,100 consumers what impact Google’s acquisition of Motorola Mobility would have on their plans to buy a smartphone from the combined company. The vast majority said Google’s ownership wouldn’t have any impact. However, of the respondents that indicated a preference, four times the number said they were ‘more likely’ (13%) than said they were ‘less likely’ (3%) to buy a smartphone from the combined company in the future.

The planned $12.5bn sale of Motorola Mobility stands as the second-largest tech acquisition announced so far this year. (The purchase doubled Google’s aggregate M&A spending.) Shareholders in the Libertyville, Illinois-based company are slated to vote on the proposed deal November 17, although it will still need to be cleared by regulators. Assuming that all goes to plan, Google should close its acquisition of Motorola Mobility by the end of the year or early next year.

‘Acquisition in Motion’?

Contact: Brenon Daly

Instead of Research In Motion, maybe we should start calling the company ‘Acquisition In Motion.’ With Monday’s announcement of its purchase of ubitexx, the BlackBerry maker has now rung up nine acquisitions in just the past 13 months. That’s as many as the company had done, collectively, in the previous seven years. As we think about RIM’s accelerated M&A pace, we can’t help but wonder how much of that activity is essentially papering over weaknesses that were exposed by its two big smartphone rivals.

For instance, RIM needed some help on its core OS, so it went out about a year ago and spent $200m on QNX Software Systems. Then it realized that office productivity apps could stand to be displayed a bit more clearly on BlackBerry devices, so it reached for DataViz. And then there was the somewhat clunky user interface, which RIM hoped to polish with its purchase of The Astonishing Tribe in December for an estimated $125m. Those deals – along with the other half-dozen recent acquisitions – were seen as signs that RIM was getting the message that its phones just weren’t as appealing as the Apple iPhone or Google Android-powered devices.

The pickup of tiny German startup ubitexx pretty much makes that sentiment official. (That’s particularly true when we consider that the transaction came just two days after RIM reported that it will sell fewer phones than it predicted this quarter, and that the phones that do sell will be going cheaper than the company originally planned. The warning knocked RIM into a tailspin, and the stock has now shed one-third of its value over the past year.) Ubitexx allows RIM to bring mobile device management for Android and iOS smartphones and tablets to its BlackBerry Enterprise Server – a somewhat belated recognition that it isn’t just BlackBerry devices that are coming to the office these days

Nokia browses for an advantage

Contact: Jarrett Streebin

In an effort to increase its appeal in emerging markets, Nokia has bought Novarra, the first of two deals in as many weeks. With the acquisition, Nokia obtains Novarra’s faster and more-efficient browser, which is important in emerging markets where bandwidth limitations exist. Nokia is also playing catch-up with players like Apple and Research In Motion that already have their own browsers.

Nokia ships more than 400 million phones annually, many to customers in emerging markets such as Africa, Asia and South America. Having a fast, low-bandwidth browser like Novarra will enable Nokia to better attract carriers in these regions and with the smartphone craze just starting to take off, the company gains an edge on competitors whose browsers require more bandwidth.

Although the deal value wasn’t released, we understand that Nokia paid roughly four times trailing sales for Novarra. The 10-year-old startup had received $88 million in funding from JK&B Capital, Qualcomm, Fort Washington Capital Partners, Kettle Partners and Colorado Investment Securities, with $50m of this coming in a round in 2007.

This move will also affect Novarra’s rivals such as Opera Software and Mozilla. The impact on Mozilla will be limited because its browser targets 3G smartphones like Nokia’s N900 to provide a rich, unconstrained mobile browsing experience. Opera is currently the market leader in mobile browsing, with more than 50 million active users, many of whom are using Nokia phones. Now, Nokia will have its own browser to compete. Although this will cut Opera’s market share, Vodafone has already announced that it will be preloading Opera on many of its phones in emerging markets. It could be that Vodafone needs a browser of its own, too.