Motorola Stock Shoots Up, Google Spirals Down After Announcement

Here’s the side of the story Android enthusiasts didn’t want to hear.  While Motorola stock has gone up 13.75% at the time of this writing, Google stock has gone down 12.23%.

Wall Street is reacting to the announcement Google and Motorola made this morning that Google is acquiring Motorola for $12.5 billion dollars. While on the surface Android and Google enthusiasts alike are praising the move for innovation and defense of the Android platform, Wall Street analysts aren’t feeling the same way.

more after the break

As SAI points out Google is about to embark on a new business model that they don’t know anything about. Sure Andy Rubin has been in the hardware business before with Danger and the Sidekick but that’s not the same.  Sanjay Jha is rumored to be safe in this acquisition but this doesn’t seem to give Wall Street the comfort it is looking for.

Google has said that they are going to operate Motorola as a separate business. Thus far there has been no mention of job elimination or a move for Motorola to Google’s Mountain View campus.  However Motorola has a work force of 19,000 while Google only has 10,000 more employees than that. In one fell swoop Google has almost doubled it’s work force and costs associated with that.

As far as work force goes this isn’t a tech start up or even a computer based company, this is hardware.  Cell Phones, Smartphones and set top boxes are designed and manufactured by the Libertyville IL based Motorola. It’s not like Google has thousands of employees already doing that type of work where they could consolidate those efforts.

Google has also entered into a very dangerous place as far as sales go.  They are now competing with the very same ecosystem partners that have helped Android get to where they were.  When Google announced the Nexus One the first thing out of journalists mouths was this same argument on a much smaller scale. Back then wasn’t Google actually entering into competition with their OEM partners. Sure the first Nexus One was made by HTC so in that case Samsung, Motorola, LG and Sony were shut out of that device.

In an interesting move to show solidarity Motorola’s CEO Sanjay Jha was actually on-site for the announcement of the Nexus One. He was a few minutes late, but there nonetheless. Jha had stated that he welcomed the Nexus One.  He even got sidestepped for the Nexu S. While Google’s PR team has assembled some quotes from the CEO’s of Samsung Mobile, HTC, Sony and LG, they weren’t there standing alongside Sanjay Jha and Larry Page, cracking champagne and breaking bread.

While some Apple fans are singing the praises of this deal saying that it proves Google needs a hardware/software business, people on the other side of the spectrum are citing the success (or lack there of) that HP is having with their own WebOS products and RIM is having with Blackberry.

Android fans are in an uproar on Google+ and in other social networks in fear that the next Nexus phone will now be made by Motorola.  Andy Rubin said that, that wouldn’t be the case and Motorola would still bid alongside the other OEM’s to produce the next Nexus phone (after the one they are working on now).

We at Thedroidguy see the Motorola move as interesting, important and exciting.  We are also waiting to see if Google makes a carrier play now.

Source: SAI
Graphic: CNNMoney