- Google Fiber — which ran fiber-optic cable directly to consumers — was an ambitious project launched in 2011 that the company later cut back on.
- Under the leadership of CFO Ruth Porat, hired in 2015, the company has shown a willingness to cut spending on projects that aren't meeting financial expectations.
Google Fiber was one of the company's most ambitious projects. Under the original vision, the company was going to run fiber-optic cable directly to consumers' homes, giving them super-fast internet.
Google announced it would roll the service out in Kansas City, Kansas, in 2011, and followed by eight other cities.
Then, Alphabet happened.
Specifically, Google hired new CFO Ruth Porat in 2015, and that August it reorganized into a holding company called Alphabet, consisting of the core Google businesses — which provide nearly all of its revenue and all of its profit — and a set of longer-term investment areas called "Other Bets."
Fiber was placed into that Other Bets category. A year later, in August 2016, the company took a closer look at the Fiber business and saw it wasn't meeting subscriber expectations. So it decided to concentrate on less-expensive wireless last-mile solutions, according to a report in The Information. A couple months later, in October, Google Fiber CEO Craig Barratt stepped down, the company "paused" all uncompleted but previously promised rollouts, and laid off some Fiber employees.
While Alphabet never disclosed exactly how much it was spending on rolling out Fiber, the company does break out capital expenditures within its Other Bets category. Capex there started climbing rapidly in the second half of 2016, peaking at $504 million in Q4. Then, it dropped dramatically. In Alphabet's most recent quarter, which it reported Thursday, it spent only $77 million on capital expenditures in the Other Bets category.
Here is a chart showing the spike, which we first saw from analyst Jan Dawson via Twitter.
The conclusion? Porat and the rest of Alphabet management are keeping a tight lid on spending in the company's long-term bets, and if these bets are not performing to expectations, they'll shut them down.
Investors seem happy with this discipline — Alphabet stock is up about 6 percent after Thursday's earnings report exceeded investor expectations.