Google Inc (GOOG) has been on a roller coaster this year, with enough ups and downs to make investors sick to their stomachs. In fact, 2014 was the first year since 2010 that GOOG ended the year in negative territory, finishing in the red by nearly 6%.
The tech goliath has been fighting battles on multiple fronts, considering the year’s onslaught of lawsuits, protests, and new product launches alongside a slew of new competitors. Google also dealt with ongoing scandals involving users’ privacy and government organizations such as the NSA, highlighted by the company’s lawsuit against the feds over surveillance and spying tactics, which came to a close early this year.
Looking back at GOOG through 2014, it’s interesting to see how Google stock prices fluctuated in response to various incidents and news. Let’s take a look at some of the more noteworthy events of the past year and how GOOG investors reacted.
1. Jan. 13: One of GOOG’s first major announcements of the year was its agreement to acquire Nest Labs for $3.2 billion. Nest Labs designed and manufactured home automation products, the most popular of which was the Nest Thermostat, capable of learning users’ preferences and automatically adjusting itself. The thermostat also is accessible via the Internet, allowing users to remotely control the temperature in their homes. As part of its push to remain on the forefront of the Internet of Things, GOOG purchased Nest Labs to strengthen its hardware presence in future web-connected homes.
The result: A minor bump in share price. Google stock increased 3.3% in the week following the announcement.
2. Jan. 26: In true tech-centric fashion, GOOG acquired little-known artificial intelligence startup DeepMind for $400 million. Google purchased the company to absorb the founders’ talents and expertise in the fields of robotics and AI, but management did not disclose anything specific with regard to future plans.
The result: Another minor bump in GOOG share price. The stock increased 7.2% in the three days following the announcement.
3. Jan. 29: Google announced that it was selling the remnants of Motorola Mobility, which it had purchased in May 2012 for $12.5 billion, to Lenovo Group Limited (LNVGY) for $2.9 billion. Initially the Street questioned the rationality behind selling an asset for nearly $10 billion less than its purchase price. Google’s head of mergers and acquisitions, Don Harrison, told Forbes that Motorola’s accumulated cash reserves and revenue from the sale its Home division and other assets meant that GOOG effectively paid approximately $3 billion for Motorola’s patent portfolio. Since Motorola failed to generate a profit, Google stock would benefit in the long-run from shedding the expensive, non-performer.
The result: Google stock jumped 6.7% on news of the sale to Lenovo.
4. Feb. 7: GOOG completed its purchase of Nest Labs after receiving the go-ahead from the Federal Trade Commission. Google revealed its intentions to use Nest Labs’ cutting-edge products and design team to further its foray into the “connected home” arena, with particular focus on integration with GOOG’s Android smartphone OS. Management clearly wanted to put Google on the front lines of home automation, a market estimated to be worth at least $44 billion by 2017, and Nest Labs was the perfect entry vehicle.
The result: Initially the Street didn’t react when GOOG sealed the deal, as shares barely inched up 3.6% by the end of the month.
5. Mar. 18: Android Wear was unveiled on GOOG’s official blog, with key features highlighted and illustrated in videos depicting real-world scenarios and situations. In the race for domination of the budding wearables market, Google announced that Android smartphone users could expect a host of wearable tech from hardware partners such as Samsung Electronics (SSNLF), LG Display Co Ltd. (LPL), Asustek Computer, Inc. (AKCPF), HTC Corp (HTCKF), and Motorola Solutions Inc (MSI). Furthermore, the company revealed that Broadcom Corporation (BRCM), Intel Corporation (INTC), and Qualcomm, Inc. (QCOM) would be providing the silicon in these new devices.
The result: The Street didn’t respond as expected — initial reactions were non-existent as share prices barely moved at all following the unveiling. Later, however, Google stock slid more than 6% over the next 10 days, also unexpected.
6. Apr. 14: GOOG bought Titan Aerospace, a start-up that manufactured solar-powered drones. Continuing the battle to prepare for the future of unmanned aerial domination, Google snapped up Titan ahead of competitors Facebook Inc (FB) and Amazon.com, Inc. (AMZN), which had both expressed interest in pursuing acquisitions in the drone arena. Initially, GOOG cited Titan’s prototype drone that could remain airborne for several years as a focal point, describing intentions to improve its Maps functionality and accuracy. However, with Google’s known affinity for researching new ways to provide Internet access to the entire globe, the possibility of using Titan’s drones for future Wi-Fi-type broadcasting could not be ruled out.
The result: A modest boost to Google stock followed the acquisition, as GOOG rose 4.9% in the 48 hours following the announcement.
7. May 16: In an effort to end a tiresome and expensive lawsuit, Google and Apple Inc (AAPL) agreed to settle litigation that originally stemmed from Motorola’s 2010 accusation that Apple infringed on several patents. Considering Motorola’s new-found legal resources thanks to GOOG’s earlier acquisition of the company, Apple agreed to settle the lawsuit.
The result: Investors in Google stock were extremely pleased with this outcome, and shares jumped 8.7% in the days following the announcement.
8. May 28: Google unveiled a working driverless car prototype, which was operated without input or involvement from human passengers. The two-seat electric vehicle showcased at a Re/code conference by GOOG co-founder Sergey Brin was unique in that it was the first-ever designed entirely by Google (previously, the company chose to modify existing vehicles). Brin stated that GOOG planned to begin testing the automated vehicles in California later in the year.
The result: GOOG investors didn’t even react to the news. Shares remained flat following the announcement, and actually declined more than 1.5% over the next several trading days.
9. June 25: The official launch of Android Wear at Google I/O, the company’s annual developers conference, involved impressive demonstrations of functionality for such early versions of Android wearables. Using comprehensive voice commands, the devices were shown obeying instructions ranging from ordering pizza to composing email to calling a taxi service.
The result: As impressive and revolutionary as it may have been, Google stock did not jump as many had expected it would. Instead, the needle moved only slightly after the I/O conference. Within a month, GOOG was up only a mere 5.7%.
10. Sept. 5: GOOG, together with fellow tech behemoths Apple, Intel, and Adobe, challenged a federal judge’s order requiring the companies to increase the sum paid to members of a massive class-action lawsuit. The complaint accused the companies of conspiring to intentionally keep compensation for employees at levels lower than what should realistically be provided. The group offered a $324.5 million settlement, but the judge rejected that offer and demanded higher payouts. Defense attorneys filed a joint motion to challenge the ruling. This event demonstrated GOOG’s backbone and willingness to stand up to unacceptable legal findings. Considering the slew of lawsuits against the company, including countless outrageous complaints over everything from the price of Android phones to cleavage captured by Street View cameras, GOOG’s resistance to what it believed was an unfair ruling should have boosted investor confidence.
The result: Google stock was unaffected by the news; share prices rose only 1.3% in the two weeks following the group’s decision to challenge the judge’s demand for a higher settlement.
11. Oct. 10: The entire market, particularly the tech-heavy Nasdaq Composite, declined after an unfavorable earnings report in the semiconductor sector. Semiconductor manufacturer Microchip Technology Inc. (MCHP) announced disappointing quarterly sales, and the Street responded by dumping tech shares across the board, GOOG included. While Google is not in the semiconductor business, its smartphone and tablet lines prevented it from escaping the selloff.
The result: Google stock dropped nearly 6% in the weeklong slide.
12. Oct. 19: Android Lollipop and three new Nexus devices were revealed after images of the devices were leaked online. The Nexus 6 smartphone, Nexus 9 tablet, and Nexus Player set-top streaming television box were displayed and described, with promised availability in the weeks that followed. GOOG’s unveiling, however premature, was in direct response to the release of Apple’s iPhone 6 the month prior. Google attempted to maintain its dominance in the mobile market by releasing both a smartphone and tablet, as well as break into the television space with the set-top streamer. The company has made similar previous attempts with other Android TV devices, but results have been unimpressive and cord-cutters have consistently chosen other devices such as those made by Roku, Inc.
The result: The Nexus Player did nothing to move the needle, but Google stock prices got a very nice bump on the back of interest in the Nexus 6 smartphone and Nexus 9 tablet. GOOG increased 8.6% in response to the news and promised availability.
13. Dec. 16: An analyst at J.P. Morgan reduced his estimates for Google stock and lowered his target price. Considering the roller coaster of a year already, investor confidence in GOOG was insufficient to combat such unfavorable coverage.
The result: GOOG investors reacted by selling even more shares, pulling the stock down more than 1.5% to finish the day at a 13-month low of $508.99.
As of this writing, Greg Gambone did not hold a position in any of the aforementioned securities.