Google's big deal pushes stocks higher

(By: MSN Money)


Stocks have started the week with a sharp rally, thanks to the excitement of Google's(GOOG) agreement to buy Motorola Mobility (MMI) for some $12.5 billion, in cash no less. 

Google's deal for Motorola set off a lot of excited buying in other makers of mobile phones, especially Nokia (NOK) and Research In Motion (RIMM). 

Also helping stocks was relief that European markets were higher, a day ahead of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy about how to shore up Europe's banking system. In addition, Japan said its economy pulled back less than expected in the second quarter. Analysts had expected the March earthquake would result in growth falling 2.5%; today's report put the decline at 1.2%. 

If there's a worry about the rally, it's this: The Standard & Poor's 500 Index ($INX) has been unable to break 1,200.

At 1:40 p.m. ET, the Dow Jones industrials ($INDU) were up 138 points, or 1.2%, to 11,407. The blue chips had been up as many as 174 points at 10:45 a.m. ET. The S&P 500 was up 17 points, or 1.4%, to 1,195. The index peaked at 1,199.60 when selling suddenly hit the market. The Nasdaq Composite Index ($COMPX) was up 23 points, or 0.9%, to 2,531; the index had been up as many as 38 points. 

The Dow has risen or fallen by at least 100 points for six straight sessions and eight out of the last 10.

The market gotten some lift overall from tech stocks. But the real fuel was gains in energy and financial stocks. Energy shares moved higher as crude oil (-CL) moved up to $86.79 a barrel from Friday's $85.38. Exxon Mobil(XOM) was up 2.5% to $73.77; Chevron (CVX) added 2.4% to $98.17.

Gold (-GC) was up $13.60 to $1,756.20 an ounce. Silver (-SI) was up 25.6 cents to $393.37 an ounce. 

The dollar was lower as European stocks moved higher. That's helped shares of companies with big exposure to Europe. Caterpillar (CAT) rose 1.7% to $91.37. 

Google gets into the hardware business
The Google-Motorola deal has a lot of meaning. One reason Google wanted Motorola is that it is one of the biggest licensees of its Android operating system. It has deep relationships with many component makers, according to Kt Eaton, writing on FastCompany.com. 

The company, for all its faults, understands how to manufacture devices in big numbers, something Google does not. 

Plus, Motorola owns a lot of patents that it has used to protect its devices, and Google wants those as well. Actually, there's been a debate all day over whether patents are more important than the manufacturing expertise. 

The bottom line is that Motorola shareholders are big winners today. Shares are up 56% to $38.18. The biggest winner among Motorola's shareholders may be corporate raider Carl Icahn, who owns about 11% of the company. His stake was worth more than $1 billion today, up from $655.8 million on Friday.  

What's not clear is what will happen to Samsung Electronics, which has helped build Android-based devices into formidable competitors against the Apple (AAPL) iPhone. Apple was up 1.6% to $382.86.

Investors are betting today that the Google/Motorola deal means more consolidation in the wireless manufacturing world. That's why Nokia is up 12.8% to $6.05 in New York. It's why Research In Motion is up 4.3% to $25.61. 

Leaders and laggards
Bank of America (BAC) rose 7% to $7.69, tops among the 30 Dow stocks. The banking giant said it will sell its approximately $8.6 billion Canadian card unit to Toronto Dominion Bank (TD). It will also exit U.K. and Irish card markets as the company limits international consumer lending. 

Estee Lauder (EL) dropped 7.3% to $93.53. The maker of Clinique and Bobbi Brown makeup lines forecast adjusted earnings in 2012 to be no more than $4.20 a share, below the average analyst estimate of $4.35. 

Impax Laboratories (IPXL) gained 11.1% to $18.67. The experimental Parkinson’s disease drug being developed by the Hayward, Calif., company and GlaxoSmithKline (GSK) helped patients in a clinical trial more than a generic product, the companies said in a statement. GlaxoSmithKline rose 1.6% to $41.95. 

MetLife (MET) increased 1.2% to $33.65. Ralph Whitworth’s Relational Investors raised its stake in the largest U.S. life insurer last quarter. Relational bought 9.44 million shares to bring its holdings to 11.6 million shares, according to a Securities and Exchange Commission filing.

Transatlantic Holdings (TRH) rose 1.6% to $50.95. The reinsurer that has received three takeover offers has begun talks with Warren Buffett’s Berkshire Hathaway (BRK.B) about the company’s $3.25 billion bid. The company has received no less than three offers.

Zagg (ZAGG) climbed 15% to $16.97. The distributor of electronics accessories forecast 2011 revenue of at least $160 million, more than the average analyst estimate of $147 million.