Google: After acquisition, is the best yet to come

Thu, Aug 18th 2011, 10:46 AM

For an investor, technology companies can be a scary place.
With memories of the dot.com crash still fresh in some people's minds, investors are rightfully cautious.  But last week, Apple surpassed Exxon as the world's most valuable company, worth $337.2 billion now compared to the oil-giant's meager $330.8 billion.
It was truly a sign of the times, said Kevin Burrows, the Senior Vice President of CFAL.
"It's important to highlight that when you think of technology companies today, they aren't the same highly leveraged and volatile industries they were back in 2000, during the Internet bubble," he said.
"These companies are fairly mature now and have very strong balance sheets."
But if you're seeking an investment in technology, Borrows said Apple isn't the only company in the electronic universe.
On Monday, Google sent stocks of Wall Street flying when they acquired Motorola Mobility for a whopping $12.5 billion - in cash.
The acquisition sent Motorola's stock price surging more than 60 percent.
Analysts said the move was the first step by Google to build a position in the mobile world so they can distribute their products and services through phones and tablets.
If this proves accurate, the acquisition could mean huge strides for Google.
At press time, Google was trading at $533.14 per share.
"This is really the first time they are buying a manufacturing type of company," Burrows added. "Google is clearly diversifying.  I think this purchase made people realize that Google is not content to let its growth rate slowly decline like that of Microsoft.  That sometimes happens when you have a monopolistic situation.  It's good to see that Google, as big as they are, can still focus on earnings and revenue growth."
In fact, Burrows said he wouldn't be surprised if eventually Google surpasses Apple as the world's most valuable company.
In some respects, technology companies are a good buy when it comes to investment, he said.  They can be less risky than your industrial company that may be dependent on economic growth, or the lack thereof.
However, can these companies be too much of a good thing?
"I think that something investors are trying to get their heads around is how do you evaluate a company like Google or Facebook.  At times, these juggernauts appear to be invincible."
He points out that no business model is iron clad.
However, in his mind, what differentiates Google from Facebook, for example, is Google's willingness to diversify its holdings.
"I tend to question the valuation of something like Facebook and social media," Burrows said.  "I wouldn't put them [in the] same value for the long term. "

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