Googles Strategy Regarding Motorola Remains a Mystery
4. Google isnt saying much about Motorolabut the analysts are.
On Valentines 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; theres just the issue of Google also offering that software to the various other hardware makers.
Its 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.
If 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. To 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 lack of clarity around Motorola likely to remain an overhang on the stock, short term.
It nonetheless maintained its "buy" rating, raising the target price to $850.