Category Archives: fibre

AI, fibre, Financial Results, Google, News & Analysis

Google grows (again) but ‘Other Bets’ cost the giant $1bn

GoogleGoogle has reported its Q2 numbers, continuing a strong run of performances within the technology industry, though efforts to diversify its overall business are not paying off just yet, reports Telecoms.com.

The Alphabet brand was announced last year, with aim of allowing the team to invest in other projects more freely, without being impeded by the advertising business. It would appear the management team are not afraid to throw R&D money at its innovation team as it searches for another billion-dollar business, as the ‘Other Bets’ segment, which includes Google Fibre and the autonomous cars projects, accounted for an operating loss of $859 million. Revenues did grow to $185 million, up 150% on the same quarter in 2015, though this number was made almost insignificant by the $19 billion generated in the advertising business.

The technology industry on the whole has been providing strong numbers over the last couple of weeks, though there has been a question as to whether two advertising giants can co-exist. With Facebook reporting significant growth yesterday, advertising revenues across the period increased 63% year-on-year to $6.2 billion, these numbers were dwarfed by Google, perhaps demonstrating there is potential for both organizations to share advertising revenues, which are decreasing in value, and grow healthily.

With regard to the dwindling value of advertising revenues, Google would appear to be combatting this with volume. CFO Ruth Porat highlighted the mobile search capabilities were the primary driver behind the year-on-year growth, though the desktop and tablet search did also grow.

Numbers such as these will grab headlines, meaning it can be easy to forget about the Google cloud business, one of the top priorities for the Alphabet business moving forward.

On the same day which AWS reported revenues of $2.9 billion for the quarter, Google’s cloud business also demonstrated solid growth. Although the numbers are not specific, the ‘Other’ revenues segment which includes the cloud business, and other services such as Google play, accounting for $2.1 billion through the three month period, an increase of 33% on Q2 2015.

“Many tremendous digital experiences are being built in the cloud today, and businesses are working to take advantage of the cloud as part of their digital transformation,” said Google CEO Sundar Pichai. “We’ve been integrating our cloud and apps products to create more unified solutions for companies large and small, and these efforts are paying off.”

Following on from Pichai’s previous comments on the role of artificial intelligence on the Google cloud platform, and the wider Google business, its importance has been reiterated once again. Machine learning is being prioritized as the differentiator for Google in a competitive technology market, and only last week the team introduced two cloud machine learning APIs for speech and natural language to help enterprise customers convert audio to text and easily understand the structure and sentiment of the text in a variety of languages.

In terms of footprint, the team are not done growing yet. At the end of last month, Google and friends completed work on a new trans-Pacific submarine cable system, which will help the team launch a new Google Cloud Platform East Asia region in Tokyo. Back in March, the team confirmed it would be investing heavily in expansion of its cloud footprint with 12 new data centres around the world by the end of 2017.

AWS has previously stated it intends to break the $10 billion barrier in cloud revenues during 2016, though Google may not be that far behind. With its history of not being afraid to invest, and the growth numbers which have been witnessed over the last few quarters, Google could be set to accelerate.

acquisition, Colt, fibre, fidelity, Telco Cloud

Fidelity bid for Colt doesn’t convince directors

Fidelity Investments, which is already the majority shareholder in Colt Group, has bid to acquire the remaining stock of the telecoms and cloud provider, but Colt directors are unconvinced.

The relationship between the two companies is intimate and has been from the very beginning. Fidelity provided the cash to form Colt back in 1992, to provide telecoms services in London. It soon expanded across Europe but in 2001, together with a lot of other telecoms and tech companies, encountered problems requiring a further injection of capital from Fidelity.

For some reason, despite holding its current majority position since then, Fidelity has decided it’s time for Colt to be wholly private once more. “As founders and majority shareholders of Colt, Fidelity is pleased to announce the continuation of its commitment to the business through returning the group to private ownership,” said Cyrus Jilla, President of Eight Roads, the proprietary investment arm of Fidelity.

“We typically hold our proprietary investments outside the financial services industry, such as Colt, in the private domain. This transaction allows us to hold our investment in Colt consistent with this strategy while providing an attractive and certain value for the current Colt independent shareholders.”

The independent directors of Colt, who are there to protect the interests of its shareholders, have publicly acknowledged the offer of 190p per share from Fidelity, but reckon it’s too low.

“The independent directors believe that the offer undervalues the company and its prospects and accordingly they consider that the financial terms of the offer are not fair to the independent shareholders of Colt,” said their statement.

“The independent directors believe that the financial terms of the offer may be considered by some shareholders to be acceptable in the circumstances, and accordingly make no recommendation to shareholders whether or not to accept the offer.

“Over the course of 2015, the management of Colt has been working on a plan to refocus the company’s activities and significantly improve its financial performance. The Board has provisionally approved a new business plan and further details will be announced in due course.”

Colt’s shares were trading at around 156p before the bid and jumped straight up to 190p, implying the market thinks Fidelity’s bid is likely to be accepted.