Googles Strategy Regarding Motorola Remains a Mystery

By Michelle Maisto  |  Posted 2012-04-13 Print this article Print

4. Google isn€™t saying much about Motorola€”but the analysts are.

On Valentine€™s Day, the Department of Justice gave Google and Motorola its blessing, saying the former could buy the latter. That a software maker would buy a hardware maker is logical; there€™s just the issue of Google also offering that software to the various other hardware makers.

It€™s like if the best bread baker sold her bread to happy bakeries around town, but then decided to also open up her own storefront. Her bakery customers would be forgiven for worrying she might stay up nights, working on some special recipes or extra little buns for her own shop. Google insisted in the acquisition announcement that Motorola will receive no special treatment. During the earnings call, however, a flour-covered Google was mum on the topic.

Analysts with Piper Jaffray, in an April 13 research note to investors, suggested the more dire need was for an assurance that Google can improve Motorola smartphones.

€œIf Google is serious about keeping Motorola as a part of its business, we believe the company must address the issue that Motorola does not seem to make devices that consumers want,€ wrote the analysts. €œTo make the Motorola acquisition work, Google will have to help Motorola deliver better hardware with the newest Android releases, which may upset partners. While the investment in Motorola may not be meaningful enough to truly hurt margins, we believe investors worry that Motorola could become a distraction for Google longer term.€

Analysts at Jefferies called the €œlack of clarity€ around Motorola likely to €œremain an overhang on the stock, short term.€

It nonetheless maintained its "buy" rating, raising the target price to $850.


Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.

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