Google Seeks to Sell Satellite Unit -- WSJ
January 11 2017 - 3:03AM
Dow Jones News
Planet Labs is in talks to buy the business, which captures
aerial images of the earth
By Rolfe Winkler and Jack Nicas
Alphabet Inc.'s Google is in talks to sell its satellite
business to competitor Planet Labs Inc., a satellite-imagery
startup that is seeking a new round of funding to help pay for the
possible acquisition, according to people familiar with the
talks.
The sale of its satellite-imagery unit, Terra Bella, would be a
rapid about-face for Google, which has recently shed some of its
bolder ventures. Google bought the company for $500 million in
2014, when it was known as Skybox Imaging.
Discussions about the possible acquisition, which were first
reported by Bloomberg News on Monday, are focused on a possible
cash plus equity deal, the people said. Planet, founded in 2011, is
seeking to raise funds to help finance the deal and pay for
continuing operations, one of the people said.
Terra Bella has launched seven relatively small satellites --
each weighing roughly 220 pounds -- to capture aerial images of
earth. The company uses those images to collect data it can sell,
such as traffic at a cargo port or the size of stockpiles at a
copper ore mine. The images also helped augment Google's mapping
service, said Tim Farrar, head of satellite-research firm TMF
Associates.
But building, launching and operating a fleet of satellites is
expensive, and Google has decided it can save money by purchasing
similar imagery from third parties, one of the people said.
Mr. Farrar said purchasing such satellite imagery would likely
cost Google $10 million to $50 million a year. "They don't need to
own satellites," he said.
The move to shed a seemingly superfluous unit from the sprawling
Alphabet empire fits into the recent era of financial discipline at
the tech giant that began nearly two years ago with the arrival of
finance chief Ruth Porat from Morgan Stanley. Alphabet has also
recently pared back efforts in high-speed internet, robotics and
modular smartphones, for instance.
Planet sells imagery of the earth from its own fleet of
satellites. The San Francisco company has dozens of satellites --
weighing roughly 10 pounds each -- in orbit, enabling it to take
pictures more frequently of the earth's surface, but the resolution
of the images is low.
Terra Bella's larger satellites can take higher-resolution
images, but having just seven satellites limits how frequently it
can take photos.
Former Planet employees say the company has struggled to find
customers. With Terra Bella, Planet could sell a service that uses
its many low-resolution images to quickly detect changes on earth
and the larger ones to zoom in when necessary.
Write to Rolfe Winkler at rolfe.winkler@wsj.com and Jack Nicas
at jack.nicas@wsj.com
(END) Dow Jones Newswires
January 11, 2017 02:48 ET (07:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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