Alphabet overtakes Apple to become most cash-rich company • Hacker News Board

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

#61

Post by whatshisface » Fri, Aug 02, 2019, 6:30 PM UTC

Skunkleton wrote: post #60

jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

> Ya, that's finance 101. But here's Finance 5400: And another point: you have to imagine that the richest companies in the world have the best possible financial expertise on staff. It is safe to assume they know what they are doing.

The goals of extremely ABC-heavy portfolios (i.e. those of its founders and top executives) probably involve a lot less volatility for ABC than diversified external investors would want to see.

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

#62

Post by ceejayoz » Fri, Aug 02, 2019, 6:31 PM UTC

mhb wrote: post #59

jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

How does hoarding cash increase the share price to generate those capital gains? Shouldn't they be buying back their own shares?

The company's market cap will typically factor in the giant hoard of cash. As it increases, so does the stock.

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

#63

Post by [deleted] » Fri, Aug 02, 2019, 6:32 PM UTC

[deleted]

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

#64

Post by usrusr » Fri, Aug 02, 2019, 6:37 PM UTC

jjeaff wrote: post #35

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…

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

> They can get low interest loans using the shares as collateral. This deferring taxes indefinitely

And in case a superinflation strikes, all those loans are effectively wiped out while they keep the assets (the corporate off-shore hoard might suffer as well though, but it might be sufficiently mobile and well-managed to avoid the worst). If capitalism was a video game, it would get terrible ratings due to utterly botched difficulty scaling.

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

#65

Post by buzzerbetrayed » Fri, Aug 02, 2019, 6:41 PM UTC

bduerst wrote: post #48

lunchables wrote: post #41

Earlier quoted context omitted.

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".

The fact that it speaks to his motive is exactly what makes it fallacious.

People’s motive’s have nothing to do with whether or not what they are saying is true or false. They are either speaking truth or not. Motives can explain WHY they are saying something untrue. But not IF what they are saying is untrue.

You are saying that Thiel has a reason to lie. But you aren’t addressing whether or not he is actually lying. Instead of attacking what he said, you are attacking him.

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

#66

Post by cameronbrown » Fri, Aug 02, 2019, 6:45 PM UTC

dmix wrote: post #22

ralph84 wrote: post #5

Earlier quoted context omitted.

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.

Why not buy some companies and get some proper entrepreneurs back into the mix of management? I can't remember any recent major Google acquisitions. No mega company really has to have internal innovation. And I doubt the pretend internal startups ala skunkswork with an unlimited budget and extensive runways are a real replacement for innovation popping out of the marketplace among the bodies of a hundred other failed…

> Why not buy some companies and get some proper entrepreneurs back into the mix of management? I can't remember any recent major Google acquisitions.

Firebase (acquired in 2014) seems to qualify as semi-recent given it's become a massive product line in a few years.

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

#67

Post by eigenvalue » Fri, Aug 02, 2019, 6:53 PM UTC

usrusr wrote: post #64

jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

> They can get low interest loans using the shares as collateral. This deferring taxes indefinitely And in case a superinflation strikes, all those loans are effectively wiped out while they keep the assets (the corporate off-shore hoard might suffer as well though, but it might be sufficiently mobile and well-managed to avoid the worst). If capitalism was a video game, it would get terrible ratings due to utterly bo…

Yeah, but in a sharp downturn you get margin called and possibly wiped out if you aren’t careful. A lot more rich people have lost everything from that sort of problem than the number of rich people made even richer as a result of extreme inflation. And Weimar like inflation seems increasingly less of a near term risk considering that German 30 year yields just turned negative for the first time ever today.

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

#68

Post by friendlybus » Fri, Aug 02, 2019, 6:53 PM UTC

arcticfox wrote: post #50

friendlybus wrote: post #43

Earlier quoted context omitted.

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,…

Yeah well the discussion moves into the value of money in trying to win a tech race.

Elon's Starlink broadband provider via very-near-earth satellites could be leveraged to provide a real-world advantage against google's internet dominance.

If that conflict happened google would have to dump money into blue origin and would that be enough to counteract the advantage Starlink would have in dumping it's profits into getting more advantage?

Idk, but just making the point

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

#69

Post by MegaButts » Fri, Aug 02, 2019, 6:56 PM UTC

Skunkleton wrote: post #60

jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

> Ya, that's finance 101. But here's Finance 5400: And another point: you have to imagine that the richest companies in the world have the best possible financial expertise on staff. It is safe to assume they know what they are doing.

While I think you're probably right, a blanket assumption that "they're smarter therefore they know best" is why everyone was so surprised by what happened to Enron. I do not think this is the case with Alphabet, just saying you shouldn't blindly trust experts. There's also the subprime mortgages issue from just over 10 years ago which is much better understood now, but at the time people didn't understand them and just assumed the experts were right.

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

#70

Post by aresant » Fri, Aug 02, 2019, 7:01 PM UTC

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…

“Google/Apple invest their cash hoard very conservatively, in things like short-term treasuries, because of which their returns are very low”

This is actually wrong.

Apple alone wholly owns one of the world’s largest investment funds - Braeburn Capital - that actively manages over $270b of Apples assets leveraging very sophisticated investment strategies.

The extent to which managing its cash is now a value-add part of Apple’s business is well outlined in the tongue-in-cheek article from WSJ “Apple Is a Hedge Fund That Makes Phones”

https://www.google.com/amp/s/www.wsj.com/amp/articles/apple-...