After last week’s failure by Congress to score decisive points in a widely anticipated antitrust hearing, it seems to be business as usual for big tech companies. Monday’s announcement between Alphabet-unit (ticker: GOOGL) Google and home security firm ADT is the latest example.
Google said Monday that it was forming a partnership with the commercial security company ADT to sell its products and deploy Google machine learning technology in ADT systems.
ADT CEO James DeVries said that ADT is very interested in, aside from Google’s hardware, how it can put the company’s machine learning, artificial intelligence, and analysis software to work for home security. The CEO said he expects the company to begin selling Google’s products this year and roll out the more complete integration in 2021.
As a part of the partnership, Google is taking a 6.6% stake in
(ADT) for $450 million, and it paid an average of $8.22 a share for the stock. ADT shares soared 57% on the news, closing Monday at $13.48.
Each company said it would spend $150 million on marketing, product development, technology and employee training. Part of the deal includes introducing Google’s Nest products and Google’s video analytics capabilities into ADT’s existing security platform.
“Together with Google our vision is to create and deliver an exceptional end-to-end experience for our customers while advancing our leadership in smart home security and safety solutions,” ADT’s DeVries said in a conference call Monday. “Our partnership will leverage Google’s award-winning hardware and technology combined with ADT’s trusted security including installation, monitoring and support to create a more secure and helpful home.”
Alphabet’s stake in ADT comes amid a range of regulatory issues for Alphabet. The Justice Department has signaled it plans to initiate litigation against the search giant in the coming months, and the house of representatives is nearing the completion of its yearlong probe into antitrust concerns. Alphabet’s acquisition of fitness gadget maker
has also come under regulatory scrutiny in the U.S., Europe, and Australia.
Retail investors have flocked to ADT shares in recent weeks, according to data from the website Robintrack, which collects information from the popular trading app Robinhood. Before April, the company had fewer than 5,000 investors, and that number has increased to nearly 40,000 as of Monday, according to the site.
ADT hasn’t turned an annual profit on a GAAP basis, or generally accepted accounting principles, since 2017. In 2018, the Securities and Exchange Commission fined the company $100,000 in 2018 over its use of adjusted profit measures and ordered the company to cease giving such nonstandard figures such prominence in its earnings releases.
ADT is set to report earnings Wednesday after the market closes. Analysts estimate that the company lost 14 cents a share, on a GAAP basis, on sales of $1.25 billion. On an adjusted basis, analysts estimate a profit of 29 cents a share, up 54% from a year earlier.
Including Monday’s surge, shares of ADT are up 70% this year while the
S&P 500 Index
has risen 1.3%. Alphabet shares are up 11% in 2020.
Write to Max A. Cherney at firstname.lastname@example.org