S&P downgrades Google

S&P downgrades Google

Summary: Standard & Poor has downgraded Google's stock rating from "buy" to "sell" over a lack of confidence in the Motorola Mobility acquisition.

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TOPICS: Google, Banking
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You won't find 24/7 news coverage about this downgrade. But just as it did with the US government, Standard & Poor's has lowered its outlook for Google.

Well, maybe not "just."

As the Wall Street Journal's MarketBeat blog notes, it's an apples-and-oranges issue. While the S&P sovereign-debt group was responsible for downgrading the United States to the AA+ rating, it was the financial services firm's equity analysts who have now lowered Google's stock rating from "buy" to "sell."

It seems that S&P isn't at all confident about the Motorola Mobility acquisition, according to equity analyst Scott Kessler:

After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility (MMI 38, Hold), we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early ’12, 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 to $500 from $700.

This goes a long way towards explaining why Google's stock price started to show a distinct downward motion before the closing bell today, August 16th.

Google's going to have to do something to reignite confidence in the Motorola Mobility deal, or else that slide will only continue - if we've learned anything here in the US these last few weeks, it's that when S&P talks, investors listen.

Topics: Google, Banking

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17 comments
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  • RE: S&P downgrades Google

    Boy they just don't like anything about the USA huh?
    slickjim
    • Funny:)

      @Peter Perry

      Pagan jim
      James Quinn
    • RE: S&P downgrades Google

      @Peter Perry
      Well, Microsoft, Apple and Motorola are all up. Maybe they just don't like GOOG.
      Major Plonquer
      • Or maybe .....

        @Major Plonquer ... it has something to do with the fact that Google's bank account just dropped by $12.5bns due to a purchase of a company division that is being working on the red for more than 3 years.
        wackoae
  • RE: S&P downgrades Google

    Werent this the same fools that Rated those mortgages Triple AAA that caused all this problem doing the same thing again?
    Viper589
    • RE: S&P downgrades Google

      @Knix96

      Yep. Why anyone listens to these lunatics is beyond me. Economics is the new hindsight science with the efficacity of astrology.
      tonymcs1
    • RE: S&P downgrades Google

      @Knix96
      linux source may be available (mac os x isn't) but hardly <a href="http://www.cambalkon.gen.tr" title="cam balkon">cam balkon</a> any one uses it which is why <a href="http://www.stylishcambalkon.com" title="cam balkon">cam balkon</a> it has so little malware. It would be no more <a href="http://www.ilgazhacihasan.com" title="cankiri">cankiri</a> secure than windows if linux were <a href="http://www.cambalkontr.com" title="cam balkon">cam balkon</a> on 90% of desktops and quite conceivably much less secure since bad guys would have the source <a href="http://www.glasslifecambalkon.com" title="cam balkon">cam balkon</a> which would make it easier to find bugs. Also you couldn't have 3 day turn arounds <a href="http://www.anadoludesign.com" title="web tasarim">web tasarim</a> for patches anymore, as 100k PC shops are not going to deploy a patch with so little testing just to <a href="http://www.elitstarcambalkon.com" title="cam balkon">cam balkon</a> see their entire <a href="http://www.efecambalkon.com" title="cam balkon">cam balkon</a> org. go boom. Basically <a href="http://www.bagdatgelinlik.com" title="gelinlik">gelinlik</a> everything that makes linux sexy would evaporate if <a href="http://www.hasaluminyum.com" title="aluminyum">aluminyum</a> everyone used <a href="http://www.hasaluminyum.com" title="profil">profil</a> it.
      cambalkon
  • RE: S&P downgrades Google

    Seems to me Google made a desicion without really thinking about it.
    The one and only, Cylon Centurion
    • Oh, they thought about it, a LOT.

      @Cylon Centurion Their problem was that they had a [b]big[/b] problem, patent protection, without any really good solution. After losing out on the Nortel patents [b]and[/b] hearing MMI CEO Sanjay Jha making noises about suing other Android handset manufacturers, Google had to pull the trigger to acquire the IP, and the legal protection those would offer.

      It's also worth noting that "Buy" to "Sell" is a double-jump. "Hold" is an intermediate recommendation that S&P makes as well.
      matthew_maurice
  • RE: S&P downgrades Google

    Guys, go easy on them. I dont think they have any friends left... This may just be standard and poor crying out for help.
    nickswift498
  • RE: S&P downgrades Google

    Ballmer, Elop, and S.Jobs couldn't stop laughing for the last 3 days... which sounds like muahahaha...muahahaha...muahahaha...
    owlnet
  • *** BREAKING ***

    S&P is reported to be on a 'major downer'.<br><br>
    A rescue team of Psychologists is on their way to corporate headquarters. The plan includes singing happy songs, the Coke song, We are the World, Get Down and Get Funky, all in an effort to pull them up out of their purple haze is on my brain syndrome.

    Please adjust your portfolios accordingly!<br><br>Details at 11pm. Exclusive Chopper 9 footage.
    Dietrich T. Schmitz *Your
    • Luv It!!

      @Dietrich T. Schmitz * Your Linux Advocate

      [b]+1[/b]
      rhonin
    • RE: S&P downgrades Google

      @Dietrich T. Schmitz * Your Linux Advocate <br><br>+1 too
      czorrilla
  • RE: S&P downgrades Google

    Bandwagon!
    MarceloNunesPOA
  • RE: S&P downgrades Google

    Well Google has been making a lot of purchases lately, and the Motorola one for $12.5 billion is pretty steep.
    LoverockDavidson_-24231404894599612871915491754222
  • RE: S&P downgrades Google

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    cambalkon