BGC Partners Maintains Buy on Google Pending Motorola Acquisition

BGC Partners has published a research report on Google

commenting on the company's progress since Motorola's

pre-announcement on January 10, 2012. In the report, BGC writes, "Our net revenue estimate of $8.4B is growth of 32.4% YoY and 12.3% sequentially. Our net revenue estimate compares to consensus estimates of $8.4B. Our adjusted EPS estimate of $10.84 compares to $8.75 in the prior year and $9.72 in the prior quarter. Consensus adjusted EPS is $10.49. Our operating margin estimate is 33.5% and compares with 35.3% in the prior year and 31.5% in the prior quarter. Google stock dropped 4.2% (biggest drop since August 18, 2011) after Motorola pre-announced on January 10, 2012. The Motorola acquisition is likely to raise operational challenges for Google in the hardware space including slower growth, lower margins, management distractions, and alienation of its other hardware partners. We also express concern that Google may pursue a strategy of offering subsidized hardware to promote its Chrome and Android operating systems. While this may prove successful over the long term, it is likely to have an immediate negative impact to margins if implemented." BGC Partners maintains its Buy rating and $650 price target on Google, which is currently trading up $2.97 from yesterday's $632.91 closing price.