Mark Evans

So What Does Google do with $4.2B?

The New York Times' John Markoff has an article today suggesting people will be disappointed if they expect Google will a blockbuster deal with the $4.2 billion it plans to raise in a secondary offering. Instead, he believes Google could continue to acquire small start-ups with interesting technology and strong R&D. A case in point is Android Inc., which Google bought last month. There is not much known about Android, which is led by Danger Inc. co-founder Andy Rubin, other than it makes software for mobile devices. This may indicate Google is interested in expanding its reach into the wireless world but the idea of Google may launch a Google-branded smartphone, for example, seems farfetched. So why does Google need to raise $4.2 billion if few people believe it will make a major deal and it already has $2-million of cash? For one, smart companies raise money when there's demand for their stock. Look at all the dot-com firms that didn't do a financing during the boom - only to run out of money when the bubble burst despite having good technology/business plan. The other angle is “never say never”. A big deal may not have been Google's modus operandi so far but it's nice having cash in the bank if something irresistible comes along. As much as many people are doubtful Google will make a big financial splash, I still believe there are many fertile markets (instant messaging, VOIP, e-commerce, social-networking) where Google can become a huge player by leveraging its world-class brand and millions of loyal users.
The Street.com's Cody Willard offers his take on Google's fund-raising activity - raising the possiblity the company may get into the wireless Internet access, video storage or video services markets. Another option, he opines, could be the acquisition of Tivo Inc., which would cost about $500 million plus a takeover premium. Andy Abramson also offers up a list of reasons why Google shouldn't buy Skype. Among the most intriguing is if Google is really keen about the telephony space, it should buy Research in Motion before Microsoft does.