Selling Google Fiber is an option
Alphabet’s (GOOGL) fiber-optic Internet business, Google Fiber, has been in headlines in recent months due to its restructuring. In 2016, Google Fiber moved to scale down, retrenching staff and letting its chief executive go while raising questions about whether the home Internet project has already lost its appeal within the Alphabet organization.
Google Fiber is part of Alphabet’s Other Bets operations, which generated $197 million in revenue in 3Q16.
Google Fiber in focus
Alphabet will release its 4Q16 results on January 26, 2017, and Google Fiber will be on investors’ and analysts’ radars as questions plague the future of the business. Specifically, these questions range from whether Alphabet plans to sell its home Internet business, to whether the company intends to retool it.
If the project is earmarked for sale, investors will be looking for updates about when Alphabet intends to make such a move, if any company has shown interest, and how much the business could fetch on the market.
Google Fiber competes with Comcast (CMCSA), AT&T (T), Verizon Communications (VZ), and CenturyLink (CTL), among others in the high-speed home Internet market. However, Google Fiber has struggled to gain traction since its launch in 2010. MoffettNathanson analyst Craig Moffett estimated in a September 2016 report that the service had slightly more than 450,000 broadband subscribers.
Spin-off or shutdown?
Analysts have also said that Alphabet could spin off or shut down Google Fiber. Under Chief Financial Officer Ruth Porat, Alphabet is aiming to be more financially prudent, leaning toward the downsizing of several of its experimental projects.
Alphabet’s focus on financial discipline has come at a time when the company’s core Google unit is facing stiff competition from Facebook (FB), Twitter (TWTR), and other companies in terms of digital ad spending.