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Wiz by itself is a great business and public markets will price it accordingly, but Google is able to price it much higher because of its unique position. Wiz +
by film42 2y ago
Wiz by itself is a great business and public markets will price it accordingly, but Google is able to price it much higher because of its unique position. Wiz + GCP sales team will boost adoption of the main product, a Google branded security tool keeps eyes from looking out, and of course, the ability to move huge amounts of revenue from competitors over to GCP is something only a hyper-scaler can tap. At 36x+ valuation, this is still a great deal for Google.
- otterley 2y agoOn what are you basing your opinion that this is a "great deal"? Google is going to have to earn close to $100B in profit attributable to this acquisition over the next 10 years in order to financially justify it.
- SJC_Hacker 2y ago> On what are you basing your opinion that this is a "great deal"? Google is going to have to earn close to $100B in profit attributable to this acquisition over the next 10 years in order to financially justify it. Maybe like the Motorola acquisition - not so much the profit attributle from the acquisition but the profit they *won't* lose by not acquiring them.
- diogofranco 2y agoI don't think that 100B number is correct. It would be if Google had to give back the business (or it imploded) after 10 years
- otterley 2y agoThat $100B is a based on a ballpark estimate of how much a passive investor would expect to earn by putting $32B of their money into a high-yield stock fund (yielding 15% per year, which is a conservative annual growth rate for a cloud provider) and sitting on it for 10 years. If Google can't do at least as well as that, the investor would be better off with the stock fund.
- diogofranco 2y agoYes but I'm saying that they will still own Wiz at the 10 year mark, so you can discount their valuation at the time from the 100B.
- otterley 2y agoI accounted for that in my math. Investing $32B for 10 years at 15% interest compounded continuously = $132B.
- film42 2y agoIt's smart defense, great offense, and a good product behind it. Each eat a big chunk of that $100B target. I don't see Wiz as a 10 year company, I see it as a forever requirement for companies to manage all of their cloud resources (across all providers). It will be here as long as GCP/AWS are here. I expect a short path to ROI on this one.
- otterley 2y agoConsider that AWS's entire operating income for 2024 was $40B. GCP is 1/5th the size. I admire your optimism, but I think it's unwarranted.
- StackRanker3000 2y agoSo why do you think Google is making this acquisition?
- otterley 2y agoWiz is a recognized leader in the CNAPP/DevSecOps market, and so they'd be naturally attractive to any cloud hyperscaler. Google had to either build or buy a similar solution to grow GCP; and they chose to buy. But $32B is an enormous hunk of cheddar, and I don't know why they felt compelled to pay that much. The ROI on such a large investment is unclear.
- stevenAthompson 2y agoIt gives them (legally debatable) visibility into how customers are using their competitions products. That's part of the reason it didn't happen under the Biden administration. Trump is very much against enforcing anti-competition laws though, so the deal suddenly began to make sense again.
- otterley 2y agoGoogle would have to be contractually bound not to do that, or Wiz customers would flee like rats off a sinking ship, which would significantly devalue their investment.