Google Drastically Slows Acquisition Spending

December 3, 2015

As Google becomes Alphabet, the company seems to be taking a new approach to its investments. Business Insider declares, “Google Slammed the Brakes on its Acquisition Machine, with the Lowest Deal-Making Since 2009.” The article references Google’s 10Q quarterly earnings report, and compares that quarter’s acquisition total of $250 million to the company’s speeding sprees of years past; see the post for details. Writer Alexai Oreskovic observes:

“The M&A slowdown comes as Google has transformed itself into the Alphabet holding company, which separates various Google projects, such as fiber-based internet access, and Nest into separate companies. It also comes as new CFO Ruth Porat has taken steps to make Google more disciplined about its spending, and to return some cash to shareholders through buybacks. Stock buybacks and slowing M&A — perhaps this is the new Google. Or perhaps Google is just taking a breather on its acquisitions to digest all the companies it has swallowed up over the years. Asked about the slowing M&A, a Google representative responded by email: ‘Acquisitions by their nature are inherently lumpy and don’t follow neat 9 month patterns.’”

Well, that’s true, I suppose, as far as it goes. We hope this turn to fiscal discipline does not portend trouble for Google/ Alphabet. What is the plan? We are curious to see where the company goes from here.

Cynthia Murrell, December 3, 2015

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