Google jumps 7 percent as investors cheer mobile growth

PALO ALTO, Calif. ― Shares of Google Inc. jumped over 7 percent on Friday, a day after the internet search giant said robust growth at its mobile business and a strong emerging market lifted its third quarter, allaying worries that a slowing Europe was hurting business.

The strong mobile revenue underscores the importance of Google’s Android mobile software — already the world’s most-used smartphone platform — and supports the rationale for its Motorola Mobility Holdings deal, analysts said.

In August, Google said it will acquire Motorola Mobility for $12.5 billion. The deal will give Google access to one of the largest patent libraries in the wireless industry as well as hardware manufacturing operations that will allow it to develop its own line of smartphones.

The company is plowing money into its fast-growing mobile business which competes with iPhone-maker Apple. Google’s Android mobile software now powers 190 million devices, up from 135 million in mid-July.

“While Google is large and well-followed, we still see the company as an underappreciated mobile play,” BofA Merrill Lynch analyst Justin Post said in a research note.

“We see Google as a 15 percent grower, warranting a premium valuation to the large cap technology sector.”

However, Post — an analyst with a five-star rating, according to Starmine data for the accuracy of his earnings estimates on the company — cut his price target to $720 from $740 citing the complex Motorola buy as a near-term overhang.

Some investors worry that a move to build its own phones could jeopardize support for Google’s free Android mobile software from other phone manufacturers such as Samsung Electronics and HTC Corp.

Many other brokerages raised their price targets on the company, some by as much as 10 percent.

Leave a Reply

Your email address will not be published. Required fields are marked *