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Alphabet overtakes Apple to become most cash-rich company

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Re: Alphabet overtakes Apple to become most cash-rich company

#41

Post by lunchables »

bduerst wrote: post #7
wpasc wrote: post #4

This 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 a…

I think most people would agree he has an agenda, but your post is just an ad hominem attack against Thiel and doesn't address the original poster's question at all.

Re: Alphabet overtakes Apple to become most cash-rich company

#42

Post by nostrademons »

bjelkeman-again wrote: post #15
Jun8 wrote: post #8

Earlier quoted context omitted.

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,…

I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them. I’d would attempt at investing in such a way that I create an ecosystem of companies that can learn from each other and support each other. I’d focus on climate resilience. Lots of current practices will be disrupted by changes we are already seeing. Easy? Probably not, but…

Google's done that repeatedly with Google Labs, GMail Labs, Google X, Area 120, department-internal projects like Search Demo Days, 20% time, Google Ventures, giving high-performing employees a charter to work on whatever they want for a couple quarters, etc.

It never seems to work, and it never seems to work for the reasons outlined in The Innovator's Dilemma. Big companies are held hostage by their customers. A new company needs to a.) find new customers b.) be hungry and c.) have total freedom to configure the market around oneself. None of these exist within the cushy environment of a big company - a.) is contradictory with maintaining Google's brand image, b.) is contradictory with continuing to pay the people involved in these efforts, and c.) is contradictory with Google getting first dibs on the spoils of these efforts.

Re: Alphabet overtakes Apple to become most cash-rich company

#43

Post by friendlybus »

tialaramex wrote: post #39
wufufufu wrote: post #16

In StarCraft, you always want to be at 0 minerals and 0 gas because that means you are maximizing your investment into buildings and units. People make fun of you if you don't have the skill to optimize for this.

That's a general rule, but there can be scenarios in which it isn't true, they're just far away from the "current meta" ie the way you'll usually see the game played. There are strategies that play through late-game. Because resources are finite in StarCraft, after a certain point your income is always zero. At that point if one player has "money in the bank" they're actually ahead not behind, because they can build…

I mean yeah because sc has a supply cap for units. If you go full Elon in real life there's a whole bunch more you could be spending that money on.

I'm not against goog, appl, ect building warchests, but the analogy does break down.

Re: Alphabet overtakes Apple to become most cash-rich company

#44

Post by friendlybus »

wpasc wrote: post #4

This 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".…

That stagnation can be argued to exist in google. But I'd argue Elon and bezos (up until recently) have been pushing tech hard. The DARPA robotic challenges and biochemical engineering and ml that keep chugging along in the background will provide competitors to goog if they sit on their web advertising model forever.

Re: Alphabet overtakes Apple to become most cash-rich company

#45

Post by pyb »

wpasc wrote: post #4

This 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".…

It's hard not to acree with Thiel here. We only need to look at Elon Musk to realize that there are still plenty of opportunity for moonshot investments.

What does Elon know that Google as a whole doesn't?

Re: Alphabet overtakes Apple to become most cash-rich company

#47

Post by nostrademons »

Klathmon wrote: post #18
ergothus wrote: post #10

Earlier quoted context omitted.

> 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?)

I think the idea is that if they think they are "undervalued", they can buy the stock back now for X and sell it for >X later to raise more cash for when they need it.

Or just that they can buy more shares in the buyback for the same amount of cash. All of the per-share fundamentals will go up more in that case, because there are fewer shares outstanding. Eventually, if the stock is truly undervalued, the market will realize it as shares are taken off the market and ownership is concentrated among those who recognize the value of the business, and the stock price will pop upwards.

Re: Alphabet overtakes Apple to become most cash-rich company

#48

Post by bduerst »

lunchables wrote: post #41
bduerst wrote: post #7

Earlier quoted context omitted.

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 a…

I think most people would agree he has an agenda, but your post is just an ad hominem attack against Thiel and doesn't address the original poster's question at all.

It is true that my comment is an ad hom attack, but as it speaks to the motive (and potential hypocrisy) of the speaker, it is not fallacious. It also speaks to the question as to whether or not Thiel has a point, hence the idiom "take with a grain of salt".

Re: Alphabet overtakes Apple to become most cash-rich company

#49

Post by Expez »

nootka wrote: post #37
noego wrote: post #11

Finance 101: Being cash-rich is a major advantage in environments where fundraising is a major hurdle, and where the funds can be put to productive use very quickly. For example, for a startup to raise funds for a major marketing campaign, it has to go through a lengthy and attention-demanding process of pitching to VCs and negotiating terms. Hence why having a big war-chest ready to fire, can be a competitive advant…

How does cash raise market cap aside from maybe causing uninformed investors to drive the price up? Isn't market cap share price * shares outstanding? Hence, capitalization in the market, rather than capital available internally.

Imagine a company has 100 shares and for argument's sake let's assume that company is never going to turn a profit but break even forever.

What would you pay for one of those shares? Nothing, right? The company is worthless.

Now imagine that same company has a bank balance of $100. Each share now also owns a 1% share of the bank balance (because it owns 1% of the company itself). How much would you pay for such a share? Anything below a dollar seems pretty good to me!

In other words, the more valuable assets the company holds, the more we'd be willing to pay for shares of the company, all else equal. This is called the 'book value' of a company and is total assets - intangible assets (patents, goodwill) and liabilities.

Note that the real-life situation is slightly more complex because you can't always get at the assets, even if you buy the shares for cents on the dollar. But the general idea is that you can buy shares until you have enough voting rights to dole out the cash as dividends.

Re: Alphabet overtakes Apple to become most cash-rich company

#50

Post by arcticfox »

friendlybus wrote: post #43
tialaramex wrote: post #39

Earlier quoted context omitted.

That's a general rule, but there can be scenarios in which it isn't true, they're just far away from the "current meta" ie the way you'll usually see the game played. There are strategies that play through late-game. Because resources are finite in StarCraft, after a certain point your income is always zero. At that point if one player has "money in the bank" they're actually ahead not behind, because they can build…

I mean yeah because sc has a supply cap for units. If you go full Elon in real life there's a whole bunch more you could be spending that money on. I'm not against goog, appl, ect building warchests, but the analogy does break down.

The game is a little bit different because you don't just win by crushing your opponent like you do in a 1v1 RTS. This game goes on.

I'd say the situation is more akin to a Free-for-All situation in a game like Age of Empires 2, where the winning strategy is generally to take control of key resources and suck them dry while fighting as little as possible. And then when you need to fight someone during a tech switch, you bury them with your accumulated bank.

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