Up and down Wall Street pros are whispering 'what's Google doing?'
On Tuesday the tech titan announced a $3.2 billion deal, the second largest in the firm's history and immediately chatter ensued.
However, it wasn't the dollar amount that captured the attention of investors; it was the line of business of the acquired company.
Rather than buy a hot new social media site or an innovative cloud play, Google just bought a maker of thermostats and smoke alarms – a company called Nest.
With the deal sounding like a much better fit for Honeywell than Google, the Street was rife with speculation about Google's ultimate goal.
That's because Nest doesn't make conventional thermostats and smoke alarms; their products are smart.
Nest Learning Thermostat, made by Nest LabsGetty Images
According to the Nest website, "the thermostat learns your schedule, programs itself and can be controlled from your phone. As for the smoke alarm, Nest speaks to you with a human voice. It tells you what the problem is and where it is.
Although the acquisition may seem rather tangential on the surface, Jim Cramer thinks it could reveal volumes about the company's strategy for future growth.
That is by making this acquisition, Google may be taking a big step toward a kind of home automation in which appliances and the Internet merge.
"It's not far-fetched to see Google expanding this technology into other devices over time," said Shyam Patil, an analyst at Wedbush.
Meanwhile, Cramer has heard from other CEOs that future growth for many companies will likely steam from new products that people really want. And Cramer is hearing that people will really want these Nest products.
As a result, Jim Cramer sees every reason to applaud the move.
"Anything that makes the consumer more connected to Google has to be considered a win," said Cramer. "If it's part of a better mouse trap that drives you to a Google powered device than it's definitely a win."
Google said the deal is expected to close in the next few months pending regulatory approval.
*Disclosure: On Tuesday January 14 Jim Cramer owned Google on behalf of his charitable trust.
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