Google's Nest Stops Smoke Alarms Sale - Analyst Blog

The world's largest online search engine, Google, announced that Nest Labs, which it acquired recently, will stop selling Nest Protect product, a smoke and carbon monoxide detector, over safety concerns.

The product features Nest Wave which allows users to turn off the alarm with a wave of their hand. A test revealed that any unintended movements could be misinterpreted as a wave by the smoke detector, thus disabling the alarm in the case of a real fire.

Therefore, in order to prevent any accident, management offered automatic deactivation of the feature on all smoke detectors already purchased with immediate effect. Additionally, the company will fully refund users who want to return the product. 

However, the function will deactivate the alarm only temporarily. In case of dense smoke, the alarm will ring again, helping the home owner to know about the occurrence of the fire.

Google acquired Nest Labs for $3.2 billion in cash earlier this year. Nest Labs designs and manufactures sensor-driven, Wi-Fi-enabled, self-learning, programmable thermostats and smoke detectors. It was co-founded by former Apple AAPL engineers Tony Fadell and Matt Rogers in 2010. This deal was the second largest deal in Google's history after the 2012 acquisition of Motorola.

Google is increasingly extending its foothold in new areas ranging from high-speed Internet access business to advanced research on self-driving cars and robotics.

Recently, the company completed its long-awaited 2-for-1 stock split. As a result, one non-voting Class C share will be issued in lieu of each Class A and Class B share. Class A shares carry a single vote while non-trading Class B shares (held by founders Sergey Brin and Larry Page) carry 10 votes each. The Class A and Class C shares will trade under the tickers GOOGL and GOOG, respectively.

We believe Google's stock split news will add to favorable market sentiment as most of the Class C investors without a voting right will get a chance to earn from Google's success in the future.

Currently, other stocks that are performing well include Facebook FB, Interxion Holding NV INXN and Akamai Technologies, Inc. AKAM. All these stocks sport a Zacks Rank #2 (Buy).