How Could the Sale of Its Satellite Business Impact Alphabet?



Google in discussions to sell Terra Bella

Alphabet (GOOGL) has opened talks that could lead to the sale of its satellite imagery business, Terra Bella, according to a Wall Street Journal report. Google acquired Terra Bella in 2014 for $500 million to capture images of Earth, sometimes using the images to improve its digital mapping service, Google Maps.

Google competes with Apple (AAPL) and HERE, a former unit of Nokia (NOK) that was sold to a group of German automakers. Intel (INTC), which has partnered with Mobileye (MBLY) and BMW to build self-driving cars, is seeking a slice of HERE so it can optimize the technology for autonomous driving. Google also uses Terra Bella to collect data such as stockpiles at a mining site and traffic at a cargo port, and it generates revenue from the sale of this data.

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Planet Labs could buy Terra Bella

While Google still needs to capture images of Earth and collect aerial data about traffic and other activities, it seems the company no longer wants to keep Terra Bella. According to the Wall Street Journal report, Alphabet could sell its satellite business to Silicon Valley startup Planet Labs. Planet Labs is reportedly seeking funds to help finance the acquisition of Terra Bella. The acquisition could involve cash and equity.

As for Google, the company could buy the satellite data it needs from Planet Labs without having to own the infrastructure. Therefore, talks to sell Terra Bella are seen as a continuation of financial discipline at Alphabet.

Alphabet has bolstered its financial controls since it tapped Ruth Porat from Morgan Stanley (MS) about two years ago to be its finance chief. Cost controls at Alphabet have affected the company’s moonshot initiatives such as its fiber Internet business and robotics operations.


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