Android Is Soaring, So Why Are Google Shares Sinking?

Google's shares have fallen 15% in the last three months while the S&P 500 has traded flat. This share price decline seems odd when contrasted with the spectacular success Google (GOOG) has been experiencing with its Android mobile OS. Android has proven so successful that it has moved from smartphones to tablet PCs to laptops, and its market share has surpassed that of Apple's (AAPL) iOS, according to several studies.

Part of the problem is that investors are skeptical about what Android means to Google's financial future. Google has seen a slowdown in the growth of its core search business. It doesn't have much to show for its stream of M&A deals, nor from products like Google Maps, Gmail or Google Apps. Its expansion into China has stalled due to trouble with the government in Beijing and the strength of local search engine Baidu (BIDU). Its annual revenue run rate is $34 billion, compared to $29 billion for the 2010 calendar year. And while Microsoft's (MSFT) search alliance with Yahoo (YHOO) is still a distant second in terms of U.S. market share, the world's largest software company seems bound and determined to pick up some portion of Google's customer base.

Android is open-source software, which means smartphone and consumer electronics companies don't pay Google to use it. Analysts believe that Android may spread adoption of Google's search engine on mobile devices. But it has been broadly assumed that Google would do well in the mobile world regardless as PC users transfer their search habits to wireless devices.

Many investors are also concerned about Google founder Sergey Brin replacing Eric Schmidt as CEO. There's a great deal of uncertainty about whether either man holds the key to unlocking Google's next big revenue-creating opportunity.

What is certain is that, despite its extraordinary adoption rate, Android hasn't impressed Wall Street.



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rdins4

Google doesn't make any money on android. Thats a big deal, market share doesn't mean squat if it doesn't lead to profit. They should have at least charged a small amount, you can't work for free. On top of that they still haven't figured out how to make money off of youtube, which surprises me it's taken this long with all those viewers, but they are starting to make more profits on that. I do think Google's stock is getting cheap though, probably a little undervalued here but there is a reason why it's no longer going up.

June 05 2011 at 11:23 AM Report abuse rate up rate down Reply
Mark Anthony Migut

PATHETIC, THEY CAN'T EVEN GET THE CEO NAME CORRECTLY.

GOOGLE CORRECTION LONG OVERDUE,,ADVERTISING BUDGETS GETTING SLASHED

SO WHAT!!,,,CAN I GET PAID TO BE THIS STUPID OR WHAT ???

HAY DOUGLAS(AUTHOR}...YOU'RE FIRED ! HEHEHEHEEEEEEEEEEEE

May 31 2011 at 10:40 PM Report abuse rate up rate down Reply
globenav

Android is a performance dog for resource intensive apps. M$ft won the Smart phone war 10 years ago with the Pocket PC OS and Windows Mobile.

May 31 2011 at 9:49 PM Report abuse -1 rate up rate down Reply
2 replies to globenav's comment
bggdg

Yes, Windows Mobile is knocking em all dead. LOL!

May 31 2011 at 9:59 PM Report abuse rate up rate down Reply
1 reply to bggdg's comment
rdins4

I don't know anyone that even owns a window phone.

June 05 2011 at 11:20 AM Report abuse rate up rate down
Frank Lee

I have been using PPC and WM for many years, but one thing it was not, and that's adequately powered for any apps. I reached as far as WM 6.5 and whilst a good improvement I switched to Nokia Symbian 3 OS recently. Truly excellent - fast, stable, easier to navigate, loads of apps which whizz through effortlessly, and incidentally superb phone with HD video etc in the nokia C7. I will not go for Android...security holes and scamsters, as well as further spreading the world according to Google; no thanks. As for iphone, well my comparisons made me purchase the C7 rather than iphone, much slicker and powerful and better battery life and cameras, etc.

June 01 2011 at 6:01 AM Report abuse rate up rate down Reply
Dereck

The new "Smart Tv's" also!

May 31 2011 at 8:53 PM Report abuse rate up rate down Reply
Dereck

"Automated Update Service" and "Update Links" used by Companies like: Microsoft, Logitech, Uniblue, HP, IBM, and every other Computer Hardware and Software Company are also Owned by Android Market Worldwide through "Technology Licensure Agreements". Not to brag but the Systems used by Movie Download Providers like: Netflix, Blockbuster, etc. are also Owned by Android Market Worldwide.

All that's left to say is "DROID"!

May 31 2011 at 8:51 PM Report abuse rate up rate down Reply
Dereck

The big "Misunderstanding" in the Android/Google situation is that Android Market actually Owns Google and not vice versa. Android Market is a Swiss Company and they have to protect their Name and Logo's so they Trademark through Google here in the U.S. Also Android is one of the Largest Technology Corporations in the World and its American Inventor stipulated that "No Shares" be sold and it will not be "Publicly Traded", that kind of Money is way "Too Dangerous" and would only fund thesame "compromised business interests" that are responsible for every problem that tnegligent Governments are not responsible for. Many people don't know that Android Market is the "Base" and "Sole" Control of many Technologies Worldwide like: Digital Television Broadcasting/Editing Consoles, Smartphones, MP3, MP4, and Digital Download Technology Software such as "APPs" and Books.
Apple iPhone, iPad, and App Store are Subcontracts through "Technology Licensure Agreements" from Android Market, as well as all other "Smartphones" and "Smart Pads" used by any Company that has "Smart Devices". The Verizon "Hub Phone" is also "Android" Technology as well as the Sony PSP "Download Only". I will expect Google, as well as many other Publicly Traded Companies to "Go Private" and discontinue Share Trading in the coming years. The Stock Trade is 40% of the problem with the World Economy now, to many crooks and bloodsuckers!

May 31 2011 at 8:04 PM Report abuse rate up rate down Reply
1 reply to Dereck's comment
bggdg

Do you just make up these absurdities, or is there another who is aware of your unrivaled ignorance that is feeding you such nonesense?

May 31 2011 at 9:55 PM Report abuse rate up rate down Reply
metepec

I closed my ad account as Google is now more of a shut door than window to the internet with the Panda .
Panda has shut the doors on many users..My stats fell off the cliff . Americans need to rebel against this type of Company..
Just try to explain that to their customer service folks in India...
If they listened
Sell your shares... Close your google accounts, MSN /Yahoo will win the battle as they now are partnering with Facebook.

May 31 2011 at 5:32 PM Report abuse rate up rate down Reply
SHELKASS

At over $525 per share would't a company dependent on consumer recognition, split its shares like 10 to 1 to bring the price into a range that ordinary consumers might buy?

May 31 2011 at 3:33 PM Report abuse rate up rate down Reply
1 reply to SHELKASS's comment
rdins4

Stock price doesn't matter. If a stock moves up or down 10% it's the same either way, whether you have more shares at a lower price or less shares at a higher price.

June 05 2011 at 11:25 AM Report abuse rate up rate down Reply
Bill

Google co-found Larry Page has replaced Eric Schmidt as CEO. This article incorrectly cites the replacement as: "Google founder Sergey Brin"

May 31 2011 at 12:18 PM Report abuse rate up rate down Reply
emboob11

Larry Page is replacing Eric Schmidt, not Sergey Brin. This might be the most useless article i've ever read.

May 31 2011 at 12:13 PM Report abuse rate up rate down Reply