Peter Kafka

Recent Posts by Peter Kafka

Google’s Motorola Buy Has Wall Street Selling

Larry Page doesn’t seem to care about Wall Street’s view of his company. But if he did, he’d notice that investors don’t seem to be happy about the Motorola deal.

Google shares closed at $539 Tuesday, down more than 3 percent for the day. And down 4.4 percent from last Friday’s close, when no one had any inkling Page wanted to drop $12.5 billion for a pile of patents and a hardware company.

Meanwhile Standard & Poor’s — yes, that Standard & Poor’s — has dropped the stock from a “buy” to a “sell.” Here’s analyst Scott Kessler’s note:

“After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early 2012, which GOOG indicated. Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet. Based on revised DCF analysis, we are cutting our 12-month target price.”

Again, always dangerous to read too much into a short-term swing in any company’s stock. But today’s conventional wisdom (again! caveat emptor, etc.) is that Google has spooked Wall Street because it’s not really sure what Google is thinking here: Is it really just buying patent protection, which was the company’s message yesterday? Or is the big plan to create an integrated soup-to-nuts software/hardware mobile phone company, a la Apple?

The latter, Kara Swisher argues convincingly today. And if that’s the case, Page might mollify Wall Street simply by saying that out loud. If, you know, he cared about mollifying Wall Street.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google