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

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.