Monday’s shock story was that Google is buying Motorola Mobility, the handset division of Motorola, for a whopping $12.5 billion. That’s a 63% premium and represents a high-risk investment for Google who spent about a third of its cash pile on it.
The massive acquisition in fact quadruples the $3.1 billion Google paid for DoubleClick in 2007, the second biggest acquisition by Google, and adds 80% more employees (i.e. Google almost doubled). The move was a big surprise which for the first time puts the company squarely in the smartphone hardware — rather than solely software — business.
I’m frankly amazed that the Google stock only declined 1.2% during Monday as a result of the acquisition, because this is in my opinion a very risky gamble. Why? [Update: Dropped another 3.3% during the Tuesday]