Alphabet overtakes Apple to become most cash-rich company
1–10 of 230 posts
Re: Alphabet overtakes Apple to become most cash-rich company
#2Re: Alphabet overtakes Apple to become most cash-rich company
#3Probably not coincidentally, they also just announced a plan to buy back $25 billion.
https://www.bloomberg.com/news/articles/2019-07-25/alphabet-...
Re: Alphabet overtakes Apple to become most cash-rich company
#4This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating.
The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".
I think that may be somewhat of an overstatement, but given news like this, Thiel's got a point? Buying back their own stock (As mentioned by another commenter in [1]) is a better investment of that cash instead of investing in newer technology? Please prove me wrong with a good counterpoint because I don't want to believe its true.
The specter of technological and scientific stagnation that Thiel/Weinstein (Right and Left wing individuals) talk about so much really scares me.
[1]: https://www.bloomberg.com/news/articles/2019-07-25/alphabet-....
Re: Alphabet overtakes Apple to become most cash-rich company
#5This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
Once you get to Google or Apple scale, you’re essentially a government and run into the same problems with central planning that governments do. It’s absolutely the right move to return the money to shareholders and let them reallocate it to more economically promising endeavors. That doesn’t make a statement about innovation stagnation on the whole, it just reflects the reality of diminishing returns to scale.
Re: Alphabet overtakes Apple to become most cash-rich company
#6This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
The only way he doesn't have a point is if Google thinks its company is significantly undervalued, in which case buybacks are smart. Their CEO, Sundar Pichai, gets a huge stock-based compensation, so you have to factor in how management has a large incentive to grow the stock value, but not necessarily in the long term (making buybacks desirable regardless of whether the company is actually cheap or not).
Re: Alphabet overtakes Apple to become most cash-rich company
#7This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
Thiel is also on a jingoist bend against Google, so I would take whatever he says with a grain of salt.
I saw him on CNBC claiming that Google was unpatriotic for dropping the government project Maven (machine vision for millitary drones) and that Google was also a Chinese sympathizer - despite there being no evidence and also the fact that you can't even use Google in China. The same Google employees that revolted against and killed Maven also did so against project Dragonfly. Thiel is on the board at Facebook so this could be part of his strategy for stirring the pot.
Re: Alphabet overtakes Apple to become most cash-rich company
#8This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
Here's an HBR article that addresses some of the misunderstandings in maligning buy back programs: https://hbr.org/2018/03/are-buybacks-really-shortchanging-in.... They comment that:
"... when we look at CAPEX and R&D as a percentage of revenue ... over the past 25 years, we see that the overall investment intensity of S&P 500 firms, while quite volatile on a year-to-year basis, has been rising over the past decade, and is now near peak levels not seen since the late 1990s."
If you had $25B to start a company what idea would you tackle?
Re: Alphabet overtakes Apple to become most cash-rich company
#9This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
The only way he doesn't have a point is if Google thinks its company is significantly undervalued, in which case buybacks are smart. Their CEO, Sundar Pichai, gets a huge stock-based compensation, so you have to factor in how management has a large incentive to grow the stock value, but not necessarily in the long term (making buybacks desirable regardless of whether the company is actually cheap or not).
>Their CEO, Sundar Pichai, gets a huge stock-based compensation
I'm as cynical as they come, but I'm skeptical that all people at these levels are that driven by their compensation. They are ultra-wealthy, and forever will be; a few extra million here or there isn't anything compared to what they stand to lose in wealth and reputation in the face of negative public sentiment.
But I could be wrong.
Re: Alphabet overtakes Apple to become most cash-rich company
#10This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…
The only way he doesn't have a point is if Google thinks its company is significantly undervalued, in which case buybacks are smart. Their CEO, Sundar Pichai, gets a huge stock-based compensation, so you have to factor in how management has a large incentive to grow the stock value, but not necessarily in the long term (making buybacks desirable regardless of whether the company is actually cheap or not).
> if Google thinks its company is significantly undervalued, in which case buybacks are smart
Honest questions here, as my stock understanding is fairly limited: Why does a company care if it's "undervalued"? How does a buyback actually change that valuation? (doesn't the market cap remain the same after the purchase?)