Google: S&P Cuts Rating To Sell From Buy; Sees Risks In Deal
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.
?After further consideration of GOOG?s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock,? he writes in a brief research note. ?We expect the transaction to be consummated next year, but later than early 212, 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.?
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.
http://www.forbes.com/sites/ericsavi...risks-in-deal/
?After further consideration of GOOG?s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock,? he writes in a brief research note. ?We expect the transaction to be consummated next year, but later than early 212, 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.?
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.
http://www.forbes.com/sites/ericsavi...risks-in-deal/