Google Follows Apple Into Hardware, But With Weak Hand
Google (NASDAQ: GOOG) will buy mediocre handset firm Motorola Mobility (NYSE: MMI). It is probably a play to compete with Apple. The difference is that Motorola has a relatively weak line of products, particularly compared with market leaders HTC, Samsung, and LG. At least most Motorola phones run Google’s Android OS.
The deal looks a bit like the joint venture between smartphone also-ran Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT). Microsoft did not make an outright acquisition, but the arrangement is close. It gives Nokia an operating system other than its ancient Symbian product, and marketing dollars from Redmond. Microsoft gets a platform for its Windows wireless OS product, although the size of the Nokia platform is shrinking at an unusually rapid pace.
Motorola’s best years are far behind–back half a decade to its successful RAZR product. Motorola was never able to replace it as the cellphone product aged.
Perhaps the most stunning thing about the Google buyout of Motorola is the price. Google will pay $40 a share–$12.5 billion. That is a 63% premium. Before the acquisition, Motorola’s stock had fallen from $36.34 in February to its present $24.50–down 20%.
Google must see something in Motorola that no other company did. There were no other suitors knocking on the door
Google (NASDAQ: GOOG) will buy mediocre handset firm Motorola Mobility (NYSE: MMI). It is probably a play to compete with Apple. The difference is that Motorola has a relatively weak line of products, particularly compared with market leaders HTC, Samsung, and LG. At least most Motorola phones run Google’s Android OS.
The deal looks a bit like the joint venture between smartphone also-ran Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT). Microsoft did not make an outright acquisition, but the arrangement is close. It gives Nokia an operating system other than its ancient Symbian product, and marketing dollars from Redmond. Microsoft gets a platform for its Windows wireless OS product, although the size of the Nokia platform is shrinking at an unusually rapid pace.
Motorola’s best years are far behind–back half a decade to its successful RAZR product. Motorola was never able to replace it as the cellphone product aged.
Perhaps the most stunning thing about the Google buyout of Motorola is the price. Google will pay $40 a share–$12.5 billion. That is a 63% premium. Before the acquisition, Motorola’s stock had fallen from $36.34 in February to its present $24.50–down 20%.
Google must see something in Motorola that no other company did. There were no other suitors knocking on the door
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