After scaring the world by downgrading the United States’ credit rating, Standard & Poor’s is at it again by panicking investors who own Google stock. Their advice? Sell! Why?
Because the Google 12.5 billion dollar acquisition of Motorola Mobile threatens their debt exposure, undermining stock dividend realization. What? Google is one of the richest companies in the world! Is S&P’s crazy?
Maybe. Maybe not. Who knows what the future will bringÂ—or what S&P’s is really thinking? There was a time when Apple itself teetered on the brink of bankruptcy. Last week, for a short time, Apple flirted with taking over the top spot as the world’s most valuable company. Who are they chasing? Exxon. An oil company. Who knew iPods would become more valuable than fossil fuel?
The prospects for Google stock are glorious. Web advertising only gets bigger by the year and Google leads the way to undreamed of profits with constant, and timely, innovation. Taking over a major handset producer, with thousands of mobile patents, is a brilliant strategy.
It virtually guarantees Google will corner the Android marketÂ—the place where much of the newer web-access activity will be taking place in the not too distant future. It’s already happening. How many people use their mobile phone almost exclusively, even with a laptop or PC within arm’s length. The number is growing by the minute. And it’s only the tip of the iceberg.
Some experts say Google’s long-term strategy can only be to position themselves at the top of the emerging worldwide satellite phone market. The potential for new customers is mind-boggling, especially if the service provider offers the handset for free, or next to nothing. The potential is for billions of new users, all happily viewing a few ads, in order to have unlimited, and possibly free, web access.
It’s hard to figure out why S&P is advising selling off Google stock. It may be a cynical way to shock the market into a correction. That would be the conspiracy theorist position. The truth of the matter may be much simpler.
The analysts at S&P are out of their minds.
Image courtesy of Wikipedia