Alphabet Inc’s GOOGL Google division is looking to divest Zagat, its restaurant review guide for the United States. Per Reuters, the company has been involved in informal talks with multiple companies to offload Zagat in recent months.
Google is yet to finalize a price and deadline for the divestiture. According to sources, if a deal happens, it would involve the Zagat brand as well as its website. Notably, the Internet giant bought Zagat way back in 2011 for $151 million.
Currently, Zagat is part of Google Maps and a small team looks after Zagat.com, which is a free service. It includes reviews into Maps’ restaurant listings.
Notably, shares of Alphabet have gained 35.1% in the past 12 months, outperforming the 28.3% rally of the industry it belongs to.
Divestitures Strengthening Portfolio
Alphabet has been trimming its portfolio for quite some time, a strategy that has helped it to focus on efficiently managing its core assets.
In February 2017, Alphabet announced its plan to sell Terra Bella, the satellite imaging business (then known as Skybox Imaging) it acquired in 2014 for $500 million, to Planet Labs, a San Francisco-based private satellite operator. The deal was completed in April 2017.
Moreover, in June 2017, Alphabet sold two of its robotics firms, Boston Dynamics and Tokyo-based Schaft to SoftBank Group.
Acquisitions Drive Top-line Growth
Alphabet’s top-line growth has not only been driven by its strength in core search business but also supported by the successful integration of major acquisitions (AdMob, DoubleClick, YouTube, ITA and Nest to name a few). These provided Alphabet with the technology for sustained growth in the highly dynamic and competitive markets in which it operates.
Alphabet’s acquisition of part of HTC’s mobile division team reflects management’s focus on developing hardware capabilities. This will eventually help the company compete better against handset makers like Samsung, LG, and Huawei.
Alphabet spent $130 million on acquisitions in the last quarter.
Zacks Rank & Other Stocks to Consider
Alphabet has a Zacks Rank #2 (Buy).
Micron Technology MU, Broadcom AVGO and NVIDIA Corporation NVDA are some of the better-ranked stocks in the broader technology sector. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Micron, Broadcom and NVIDIA is currently projected to be 10%, 13.75% and 10.3%, respectively.
Wall Street’s Next Amazon
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