4 ms·

> The problem with Google, or any software company buying a hardware company is that generally the street values hardware at a lower multiple so this has the ch

• chollida1 15y ago
  Software companies often have higher multiples attached to their earnings than hardware companies do. This is due to the fact that hardware companies usually have lower margins that software companies do. If the street perceives Google to now be a hybrid hardware/software company then the street could lower the multiple that they use to value them.
• nknight 15y ago
  Basically the profit margin on hardware is lower than on software, or at least that's the view of Wall Street ("the street"). Thus Google has spent a big chunk of cash on a business with an inherently lower profit potential than the rest of its business, so their stock value (which has only a tenuous relationship with the hard value of a company's assets) may decline. I doubt it's going to make that much difference, though. Google hasn't actually directed money away from "software", they've spent part of their $40 billion reserve that wasn't doing anything useful on a hardware company designed to strengthen Google's position is a market it's already sort-of in.
  • robryan 15y ago
    Although it removes some of the fears that Google were going to have patent problems (I would assume anyway, their must be some patent gold in the 24000 somewhere). So that may have been previously been factored into the stock price?