Google stock downgraded to “sell”

Standard & Poor’s has downgraded Google stock to “sell”, according to a new report from the Wall Street Journal.

The bad news comes just days after Google unexpectedly announced that it would spend $US12.5 billion in buying Motorola Mobility.

S&P equity analyst Scott Kessler said in a statement that the purchase could negatively impact the company’s financials.

“After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility (MMI 38, Hold), we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early ’12, which GOOG indicated.”

“Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet. Based on revised DCF analysis, we are cutting our 12-month target price to $500 from $700.”