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Illustration: Ellis Hamburger
GOOG Off With Markets
The market is on the skids in early trading as sluggish German growth impedes the euro zone, rekindling fears of a stagnant global economy. Shares of GOOG are off, post yesterday’s acquisition high. Catalysts include continued Android momentum in the smartphone and tablet markets worldwide (see below); regaining ground in China; any revival or partners for Google TV; the roll-out of Google Music and social network Google+ (see below); and progress in other newer initiatives (location-based services, mapping, gaming, Chromebooks, etc.). The stock trades at approximately 11.9x Enterprise Value / EBIT, inexpensive relative to historical trading levels.The Google Acquisition Of Motorola Mobility Round Up (Business Insider)
All you need to know is right here:
- Explanation: Larry Page explains why he is buying Motorola. It’s for patents. $18 billion will be spent this year in fending off lawsuits. Not on innovation, not on entrepreneurship.
- Big Gamble: The deal could end up being a disaster says Henry Blodget. It creates major channel conflicts. Google is now a low-margin hardware company.
- Integration: Google just increased its number of employees by 60% which means integration hell. Not too mention cost the company $95 million annually to feed them.
- Layoffs Coming: The last time Google bought a big company was DoubleClick, and 40% of them got the axe.
- Breakup Fee: Google agreed to a huge break up fee, about 6x the usual, to ensure the buy will pass regulatory muster.
- Google TV: Motorola doesn’t just make smartphones and tablets, it’s also the leader in home devices. Could the acquisition also be to jump start (revive) Google TV?
The Peanut Gallery Weighs In On The Motorola Mobility Acquisition (Various via techDygest)
For all the articles you’d ever want to read about the acquisition (other than Business Insider), turn to the techDygest round up:
- Google’s purchase casts doubts on the role of third party operating systems in the mobile market as Apple, Research in Motion and Google all have hardware and software stacks.
- In light of Apple’s success in vertical integration and Hewlett-Packard buying Palm, the Google-Motorola deal could now force Microsoft to buy out one of its hardware partners in order to keep pace with its rivals. As witnessed by Nokia’s rocketing stock price.
- The acquisition price equates to $40 per share of Motorola stock, or a premium of 63% over Friday’s closing price.
Some are saying it’s now a two horse race: Android and iOS. Sorry RIM and Microsoft.
Android Will Command 30% Of The U.S. Smartphone OS Market Share Next Year (eMarketer)
Some market statistics:
- Android commands 28% of smartphone users in the U.S. this year, up from 24% in 2010 and 6% in 2009.
- Android will continue to gain share through 2012, when 31% of all smartphone users will own a device running Android.
- There were 60.2 million smartphone users in the U.S. by the end of 2010, a figure which will rise to 73.3 million in 2011.
eMarketer principal analyst Noah Elkin says, “the growing patent war in the mobile technology space and a desire to protect the Android ecosystem from competitors Apple and Microsoft were driving forces behind Google’s decision to acquire Motorola’s handset business.”
Daily Trader: How To Play The Acquisition (Seeking Alpha)
Google has made a very bold play here. Whether or not this move will benefit Google in the long run remains to be seen, but it is almost definitely going to benefit Google’s competitors. Many OEMs who were formerly loyal to Android may defect to Microsoft. And Apple’s strategy just got vindicated by Google’s copycat venture into hardware.
Here Comes Social Search: Google+ Seeping Through Google (Business Insider)
Google+ is eventually going to come to all parts of Google. It started at launch, when Google+ notifications began appearing on top of Google Search and Gmail. That has been a great trick to keep people engaged. Now, public Google+ posts will begin appearing in search results. It’s exactly the kind of thing Facebook and Bing teamed up to do earlier this year.
Suburbanites Ditching Facebook For Google+ (Experian Hitwise)
The Google+ social network launched six weeks ago, and has grown tremendously despite still being in an invitation-only beta. But how has the user demographic changed? Hitwise revealed that the reach of the social network is expanding beyond early adopters and turning more mainstream; i.e., wealthy middle-aged suburbanites. Maybe Google+ found its calling.
Google’s Android Partners May Be In Legal Trouble Over Linux Licenses (Electronista)
Google’s Android partners may have made a costly mistake in ignoring the Linux licenses behind the OS. Many device makers aren’t properly giving out source code to meet the requirements. The precedent comes from a lawsuit against Best Buy over its distributing devices running BusyBox’s version of Linux. Best Buy was in legal trouble as soon as it sold anything that didn’t meet the terms of the licence. Google hasn’t responded to the new claims or the potential risks.