Earlier today, the Google filing to the SEC has been published early (an error from RR Donnelley, apparently) and the financial details for the 3rd quarter have been revealed: $14.1B in revenues for $2.18B in profits. While most companies would only dream about earnings like these, the stock market did not anticipate that Google’s profit margin would go down, and the immediate result was that Google’s stock (GOOG) went down 10% in minutes and trading had to be halted.
Of course, this is a case of missed expectations and financial analysts were quick to blame the Motorola acquisition for the missed earnings. While Motorola brought $2.58B to Google’s Revenues, it also brought more than $500M in losses. Google is obviously taking action to reduce the losses, but the real solution is for Motorola to make profits by selling their products – trimming the workforce will only carry them so far.
Some analysts are already calling for Google to take “tough decisions” in regards to Motorola. Some mean “firing more people”, while others mean “reselling the company”. This is probably a little extreme in the short term. Motorola and Google have a sufficient synergy to build great products in the smartphone or set-top box category, so it would be surprising if Google took any radical action before going “all in”. Finally, calling for radical action to protect shareholder interest goes against how Google operates.
What do you think? Can Google turn Motorola’s profits around? What do you want to see from “Moogle“?RELATED
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