Google's Wireless Plans: Out of Favor With Analysts

Posted by: Olga Kharif on November 19, 2007

On Friday, various publications, including BusinessWeek.com, have reported that Google intends to bid in the upcoming 700 Mhz wireless spectrum auction alone, without a partner.

Today, several financial analysts have come out with reports saying that such an action would be a mistake. Bernstein Research’s Jeffrey Lindsay estimates that Google may have to bid more than $10 billion to win airwaves in this auction. Such a bid would use up all of Google’s cash, cash equivalents and marketable securities. With its cash pile vastly shrunk, Google may have trouble making other strategic moves.

Meanwhile, a network build-out using the spectrum would cost another $5 billion, Lindsay figures. To build such a network without a partner, Google would have to take on significant debt — and Lindsay believes that investors won’t take to that kindly.