Could be good, could be bad - not enough info released
Could be good, could be bad. Some crucial info is missing to make the call.
The Good Case:
The cash ($285M-$20M=$265M), accumulated losses (~$1.1B), patents, and, hopefully, only few employees stay with the old company (with the right to continue using the patents royalty-free granted to the spinoff – see today’s SEC filing). A profitable acquirer purchases the old company for its patents. After that point they are welcome to shut down the business, if they don’t want to bother with running the operations.
A profitable Chinese acquirer can pay, without actually spending a penny of their own: $265M – cash $275M – accumulated losses (25%*$1.1B) ------ $540M – total
A profitable US acquirer can pay, without actually spending a penny of their own: $265M – cash $385M – accumulated losses (35%*$1.1B) ------ $650M – total
Reminder: Google purchased Motorola largely for its patents, to protect Android users against suits from Apple. Presumably they can do the same here (Google TV is competing with Apple TV, and that rivalry is expected to heat up this year), and shut down this whole business after getting the patents. I don’t think a lot of current shareholders would mind.
There are ~145M outstanding shares after the recent repurchasing. So that works out to $3.72 or $4.48 per share, respectively.
The Bad Case:
Patents, accumulated losses, and a portion of cash go to the spinoff. The old company balance sheet starts looking a lot like a startup: fairly significant cash position, no liabilities, and very small revenues. The cash position gets squandered on funding another attempt at startup reinvention.
In the meantime the spinoff (now a Hong-Kong company) wins the promised 15 trial cities and goes on to make some money. Management gets rich and the original shareholders get zero.
Only if the ‘startup’ (i.e. whatever is left of the old company after spinoff) survives long enough to see the success of the spinoff. At that point those shares would be worth something, and, if need be, can be even sold to raise cash, declare a dividend, etc.
If the ‘startup’ runs out of money before the spinoff sees any significant success, that investment will be taken over by creditors or sold for pennies on the dollar by the liquidator. And whoever gets them, will eventually realize the benefits. But, in that case, it wouldn’t be the original shareholders.