Google has idled its mergers and acquisition machine, with the company reporting the lowest deal activity, by value, in six years.
According to Google’s 10Q quarterly earnings report, filed Thursday, Google’s acquisitions in the first nine months of 2015 totaled $US250 million.
For a company like Google, which has $US72.8 billion in cash and short-term securities on its balance sheet, and which in recent years has been known to acquire companies at a pace of one a week, this is a significant slowdown.
What’s more, none of the deals struck so far in 2015 were big enough that Google was required to break out the price it paid.
By comparison, in the first nine months of 2014, Google spent $US1.1 billion on non-named acquisitions, plus $US2.5 billion on smart appliance maker Nest, $US517 million on Dropcam, and $US478 million on satellite company Sky box Imaging.
That was clearly a big year in M&A for Google. But the company generally spends a hefty amount on deals in recent years. To wit:
- 2013 (first nine months): $US369 million in non-named M&A, plus $US969 million for Waze
- 2012 (first nine months): $US1.1 billion in non-named M&A, plus $US12.4 billion for Motorola Mobility
- 2011 (first nine months): $US502 million in non-named M&A, plus $US676 million for ITA Software, $US151 million for Zagat, $US114 million for Daily Deals Gmbh
- 2010 (first nine months): $US626 million in non-named M&A, plus $US179 million for Slide, $US681 million for AdMob, $US123 million for On2 Technologies
None of these numbers include equity investments from Google or its venture arm, Google Ventures.
The M&A slowdown comes as Google has transformed itself into the Alphabet holding company, which separates various Google projects such as fibre-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, 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.