Motorola Drags Google Down With its Litigation Costs

Google’s stock price is down over three percent on Monday thanks to Motorola Mobility’s warning of poorer than expected financial results. Tough competition in the smartphone market and increased litigation costs were cited as the cause, according to Reuters on Monday.

Google is in the process of acquiring Motorola Mobility in order to give it a hardware arm plus a richer patent portfolio in order to compete in the smartphone market. The announcement by Motorola suggests that the road ahead for Google may be more difficult than envisioned. While Apple isn’t winning every patent case in the courts, the company is doing well protecting its intellectual property, and the cost incurred by Motorola seems to be taking its toll. That, in turn, is shaking the confidence of Google investors — for now anyway.

Motorola announced that its fourth quater sales would be, in fact, US$3.5B. Analyst expectations were $3.88B. Nevertheless, a small non-GAAP profit is expected.

Motorola’s announcement suggests that Google’s acquisition of Motorola Mobility isn’t a slam dunk win that many thought it might be for the search giant.

Google shares (GOOG) have dropped to US$628.32, down $21.70.