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S&P cuts Google to Sell from Buy, slashes price target by $200 over risks in Motorola Mobility deal

Tuesday, August 16, 2011 · 3:38 pm · 29 Comments

“Citing concerns about about Google‘s plan to spend $12.5 billion to buy Motorola Mobility, Standard & Poor’s analyst Scott Kessler today cut his rating on the search engine’s stock to Sell from Buy, slashing his price target on the stock to $500, from $700,” Eric Savitz reports for Forbes.

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Savitz reports, “GOOG today is down $20.47, or 3.7%, to $536.76; the stock is now down 4.8% since announcing the deal Monday morning. Or think of it this way: Google’s market cap has been trimmed by $8.7 billion in the last two days, suggesting serious doubts among investors about the company’s strategy.”

Read more in the full article here.

Categories: News

Tags: finance, google, Motorola Mobility, S&P

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Comment Feed

29 Comments

Ixol Phaane

Tuesday, August 16, 2011 - 3:46 pm · Reply

I like their strategy. I like it a lot.
Predrag

Tuesday, August 16, 2011 - 3:51 pm · Reply

Over the past two days, since Moto Mob purchase announcement, GOOG has lost come 6% of its value, compared to AAPL. Since late April, the two were tracking mostly in parallel, until Monday announcement.

It is clear that the Street isn’t exactly enthusiastic about Google’s acquisition.
- krquet
  
  Tuesday, August 16, 2011 - 6:43 pm · Reply
  
  It’ll bounce back; reality and performance be damned, Wall Street is oft forgiving of companies with lofty slogans.
Bizlaw

Tuesday, August 16, 2011 - 3:53 pm · Reply

If Apple wins its patent lawsuit against Motorola and Motorola has to stop shipping Android devices, Google REALLY overpaid for Motorola. Google must be hoping it can slap GoogleTV in all those cable boxes Motorola makes.

Good luck with that.
- Truth
  
  Tuesday, August 16, 2011 - 4:49 pm · Reply
  
  Separate division I think. Not part of the deal..
  - dude mcfarland
    
    Tuesday, August 16, 2011 - 5:08 pm · Reply
    
    Unless they didn’t buy all of google mobility the set top box division is on the mobility aide.
    - qka
      
      Tuesday, August 16, 2011 - 9:50 pm · Reply
      
      Yeah, a number of anal-ysts have been going on about how Google bought a manufacturer capable of Google TV hardware.
      
      Which they need, since Logitech lost their shirt on GTV and have bailed out.
kingmel

Tuesday, August 16, 2011 - 3:53 pm · Reply

So the acquisition has actually cost shareholders a combined $21.2B so far…
m159

Tuesday, August 16, 2011 - 3:57 pm · Reply

Google only has one real product, is wasting money on everything else, can only manage beta-level software releases, is desperately and clumsily plagiarizing Apple, and now is in full blown panic mode. What’s not to like?
- jmk
  
  Tuesday, August 16, 2011 - 4:12 pm · Reply
  
  ain’t karma a bitch?
daugav369pils

Tuesday, August 16, 2011 - 4:08 pm · Reply

S&P is not credible.
- j.eric
  
  Tuesday, August 16, 2011 - 5:53 pm · Reply
  
  Really?? What is AAPL’s rating, according to S&P?
Pirate

Tuesday, August 16, 2011 - 4:08 pm · Reply

Google… WINNING!
joell

Tuesday, August 16, 2011 - 4:14 pm · Reply

@daugav369pils …..”S&P is not credible”

I agree and stopped reading the article when I realized S&P was the source.
castelbuono

Tuesday, August 16, 2011 - 4:18 pm · Reply

The downgrade doesn’t surprise me. Yet, still amazing S & P continues to exist given their insidious role in lending/investing events leading up to the 2008 financial meltdown. Of course, other bottom feeders in the S/P pool wouldn’t know such a thing as credibility exists, or is an important consideration when pursuing market opportunities..
- m159
  
  Tuesday, August 16, 2011 - 5:20 pm · Reply
  
  Agreed on S&Ps role in the mortgage catastrophe, but their downgrade of U.S. debt was the right call, considering the dangerous game of chicken played in Washington using our credit worthiness as a hostage. And I think they’ve made the right call here.
gksmith

Tuesday, August 16, 2011 - 4:39 pm · Reply

3 years ago, GOOG was right about $500. Today it is $539. That’s pretty funny.
- Lochias
  
  Tuesday, August 16, 2011 - 5:10 pm · Reply
  
  In 2007, on November 7, Google closed at 741.79
  Apple closed at 191.79.
  
  Apple started the year (2007) at 83, Google at 501.
  Hindsight is perfectly depressing.
  - Flibbity Floo
    
    Tuesday, August 16, 2011 - 6:32 pm · Reply
    
    For whom? I’ll take a 100% increase over just under 50% anyday.
    - Lochias
      
      Tuesday, August 16, 2011 - 6:50 pm · Reply
      
      Except that as of today, it’s 350% (AAPL) and <8% (GOOG)
silverhawk1

Tuesday, August 16, 2011 - 4:45 pm · Reply

In factual news, Exxon Mobil is now a mere 4.63B ahead of Apple.
Al Hobe Sound,Fl

Tuesday, August 16, 2011 - 5:20 pm · Reply

Let us remember that S&P does not have much of a track record. eg Lehman brothers
Troy

Tuesday, August 16, 2011 - 5:21 pm · Reply

If you look at apple strategy, almost every new product they came out for the last 10 years is a greater success than the previous one. Today Apple makes more money from their mobility products than from the desktop products.
Problem with those Apple cloners is that they have success with one product, and the profits of that success help to finance a failure product (Microsoft Zune?). No matter how big is android, people who uses android is not willing to spend money so google still using search engine to finance android, and that is not looking like a good strategy to investors, as always, google is a hobby or beta products company.
GM

Tuesday, August 16, 2011 - 5:40 pm · Reply

Long AAPL. And it’s getting ready to rock and roll! Get on the train now or be left at the station.
dddd

Tuesday, August 16, 2011 - 6:08 pm · Reply

This is prob. a good downgrade because the google stock valuation based on the rumors and subsequent launch of the “G-phone” has never panned out in actual money to the google bottom line. Now the search business, that had not made money off Android, is being forced to buy and handset maker to protect the search business?

On March 20, 2009 I advised a very wealthy friend to switch her GOOG for AAPL because I realized that Google was not a consumer products company when they flopped bad with their customer relations management vis a vis the Google branded nexus smartphone launch via the Web. Since then, Google is up 66.14% and AAPL is up 296.62%

Does anyone in their right mind think that Google is going to improve the horrible customer service experience at mobile carrier franchises and big box stores? Are they going to build a moto store with experts? I think it will be the Nexus customer experience flop all over again.

If GOOG cannot break out and show more than 3% of non-search revenue, investors are not going to believe the GOOGLE growth store.
Rob

Tuesday, August 16, 2011 - 7:35 pm · Reply

Where’s that guy that told me Google’s 2% dip was normal?
Thomas65807

Tuesday, August 16, 2011 - 8:38 pm · Reply

Google stock will recover after it announces its divestiture of MotoMob’s hardware and other operating divisions — retaining only the patents it originally coveted.
- maybe,maybe not
  
  Wednesday, August 17, 2011 - 1:18 am · Reply
  
  That’s if and only of it gets the okay, more talk is out one that many don’t want this to go through due to all the offenses Google has committed, and with over 30 plus lawsuits that point the finger at them for coverups and treating 3rd party manufactures unfairly I can see this merger being stopped within the next month.
  
  Google has some very large hurdles to go over and thier over confidence and do now, deal with it latter attude is going to hurt them more them most could ever imagine.
  
  This is a failure and everyday it’s showing more so, 2 days in and it looks like this was a complete waist of Money, and if Google dosnt get approved for merger (I personally believe it won’t) they will have to shell out 2.5 billion just for the chance.
  
  Not to mention the patents if they do get them won’t help with the oracle lawsuit that is bound to show intent of deception on Googles part, the noes emails show this and the judge will allow them in the trial, Google has tried to stop them but the judge said tough. google has to many problems and has problems with following rules, this will be the downfall of them.
- Maybe,maybe not
  
  Wednesday, August 17, 2011 - 1:24 am · Reply
  
  Thomas65807,
  Sorry I do agree with you also., I hit submit before spellcheck or completion of my post.
  
  It’s like watching a very predictable soap opera. Isn’t it?
  
  I wish we had a edit option on this site.