A New-Look Motorola Could Boost Google Inc (GOOG) Shares

Samsung’s S4 was criticized by tech reviewers, who mostly liked the phone, but found it to be little different from the previous S3 model.

Apple’s iPhone 5 adds in LTE connectivity, and a slightly larger screen, but given continued strong demand for the 4 and 4S models, consumers do not seem particularly wowed with these relatively minor enhancements.

Motorola’s Moto X is probably more likely to steal Samsung’s customers than Apple’s, as both Motorola and Samsung use the same operating system. However, if the Moto X offers some truly innovative new features, perhaps some Apple consumers will be lured into making a switch.

Buy Google based on Motorola?

Last quarter, Google Inc (NASDAQ:GOOG) earned nearly $4 billion — in that context, the near $300 million Motorola lost doesn’t seem so significant. But if Google Inc (NASDAQ:GOOG) can return Motorola to profitability, it could raise earnings by at least 10%.

And, should the Moto X turn out to be the next big phone, Motorola could boost Google’s earnings significantly. In April, Samsung said its profit had jumped over 40% from the prior year — much of that due to the success of its Galaxy smartphones.

Given that Motorola represents a sliver of Google’s total business, investors should not buy the search giant based on the handset maker alone. However, the unit’s potential could help investors justify Google Inc (NASDAQ:GOOG)’s rich valuation, as it could help Google surprise to the upside in future quarters.

The article A New-Look Motorola Could Boost Google Shares originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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