Google Inc (GOOG) Gets Set to Take on its Partners

Second quarter earnings, which included a large write-off for the Surface tablet, has investors worried about Microsoft’s mobile ambitions again. That said, the yield of around 2.6%, backed by a decade of annual dividend hikes, is still notable. Growth and income investors should take a look at this mobile alternative as Google Inc (NASDAQ:GOOG) gets set to take on its partners in the space.

Going it Alone

Than there’s Samsung, whose Galaxy phones and tablets are the only true competitors to Apple’s iPhone and iPad products. The only thing is that the Galaxy products use Google’s Android. Unlike many phone players, Samsung has the size to build its own mobile OS.

Tizen, as the OS is called, is set to debut later this year. Although the effort is worthwhile, it’s a risky bet to make at a difficult juncture for the company. Like Apple, Samsung appears to be facing a sales slowdown. Bringing out a new OS could either give it an edge or turn into a massive disaster.

The fear of a disappointment should be high on investors’ minds. Microsoft’s first mobile OS was horrible and had to be largely reworked. Nokia’s efforts to build an OS were a total write-off, as it chose to dump the OS to partner with Microsoft for a much needed cash infusion.

Samsung’s shares have been trading lower on sales concerns. Investors should probably just avoid the stock. Tizen might be the right move, but investors are being driven by emotion today and a self-made OS could turn the company’s fortunes for the better or the worse. The risks are just too high.

The Biggest Fears Realized

Google stepping into the mobile phone ring is probably among the biggest fears for its partners. Now that Moto X is out of the bag, look for changes in the industry. Microsoft is likely to be a big winner as Google partners look for more OS options.

Google Inc (NASDAQ:GOOG), meanwhile, is taking a big risk that could hinder sales at a time when its margins have been contracting. Investors should keep a close watch. Samsung is also taking a big risk by trying to build an OS on its own. Investors have already soured somewhat on the shares and this added risk won’t help. Avoid the stock until its efforts to revitalize growth begin to show results.

The article Google Gets Set to Take on its Partners originally appeared on Fool.com.

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