Is Google Looking To Beef Up Its Smartphone Efforts?

The competitive landscape within the smartphone market could intensify even further if reports are true that Alphabet Inc GOOG GOOGL is looking to acquire HTC's mobile division.

Alphabet's Google unit is reportedly in the final stages of negotiations to acquire HTC's struggling mobile manufacturing division, BGR reported. Doing so would imply that Google would become both the owner and operator of a mobile division.

By acquiring HTC, Google would be able to offset some of the challenges that its mobile computing business would face, UBS's Eric Sheridan commented in a research report. For example, the in-house integration of hardware and software would offset some of the "Android fragmentation" issues that Apple Inc. AAPL is able to avoid with its iOS.

The combination would also improve on development cycles that will better maximize mobile computing trends like Google Lens or Google Assistant, the analyst continued. Also, an acquisition of HTC's mobile phone unit will prove to be an offset to any negative industry dynamics from the European Commission's ongoing investigation of Android.

Finally, there are no indications of what the price tag on any deal would be and the company's $95 billion in cash and $650 billion market cap implies that any acquisition will likely be immaterial.

Sheridan maintains a Buy rating on Alphabet's stock with an unchanged $1,080 price target.

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