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Alphabet Loses $859M on 'Moonshots' in 2Q 2016

nytimes.com

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Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#181

Post by mfav »

anjc wrote: post #153
mfav wrote: post #25

Subtly dishonest journalism in my opinion. This article could just as easily be titled "Alphabet invests $859M on long-term projects". In fact, that would be a more accurate title since that is precisely Google's intent.

There's nothing dishonest about it. It's a loss because these are explicit investments which haven't produced any earnings. When they produce any sort of revenue then their financial statements (and media reports of the financial statements) will say "Other bets showed an operating profit of $Xm". It's just a media report on a fact.

There's some intentional provocation going on with the title. Sure, it's factually correct, but choice of words really pulls the truth one way or another.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#182

Post by [deleted] »

anjc wrote: post #153
mfav wrote: post #25

Subtly dishonest journalism in my opinion. This article could just as easily be titled "Alphabet invests $859M on long-term projects". In fact, that would be a more accurate title since that is precisely Google's intent.

There's nothing dishonest about it. It's a loss because these are explicit investments which haven't produced any earnings. When they produce any sort of revenue then their financial statements (and media reports of the financial statements) will say "Other bets showed an operating profit of $Xm". It's just a media report on a fact.

[deleted]

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#183

Post by kgwgk »

whack wrote: post #123
Retric wrote: post #121

Earlier quoted context omitted.

In terms of internal projects gmail, and local maps comes to mind. If your going to call everything that did not work a moonshot then by definition no. However, it's only a failure when they give up so self driving cars are rather undecided at this point, and theses projects help recruiting which has non obvious benefit.

By moonshots, I'm referring specifically to projects that came out of the "Other Bets" division. That division specifically invests in projects that are "out there." From what I hear, realistic products like gmail and maps came out of the 20% time and other product-divisions, not the "Other Bets" division.

Considering that the Other Bets division (and Alphabet itself) was created one year ago, maybe it's too early to evaluate what has it produced.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#184

Post by fragola »

w1ntermute wrote: post #5

There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: ht…

Yes, I think this is all about the mystique of Google as an exciting and innovative place to work. I mean, it is essentially an ad company.

(No offense to Google, what they do is really very cool and the scale is mind boggling. But capturing ad revenue doesn't capture the imagination)

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#185

Post by outworlder »

zaroth wrote: post #33

I don't think it's right to equate R&D spending with "losses". Google makes a profit, not a loss, so technically it does not have losses. It has expenses, and among those, investments in future technology. If all Google could do with their cash flow was pay a dividend, that would be very sad, and it would call for a much lower P/E ratio. This article completely misstates the facts. Perhaps the way they break out thei…

> I don't think it's right to equate R&D spending with "losses".

I was baffled by that. Is this just because they called it "Other Bets" instead of plain old boring R&D?

If anything, that would make me want to buy Alphabet stock. We need more companies willing to invest on "moonshots", as the article calls it. We need to get back to the Xerox PARC times.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#186

Post by Amygaz »

zaroth wrote: post #33

I don't think it's right to equate R&D spending with "losses". Google makes a profit, not a loss, so technically it does not have losses. It has expenses, and among those, investments in future technology. If all Google could do with their cash flow was pay a dividend, that would be very sad, and it would call for a much lower P/E ratio. This article completely misstates the facts. Perhaps the way they break out thei…

That story was written by someone at AP covering the tech industry. He has consistently showed terrible analytical acumen and reporting of major and minor events. http://bigstory.ap.org/content/michael-liedtke

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#187

Post by SiVal »

Nicholas_C wrote: post #160
mathgeek wrote: post #155

Earlier quoted context omitted.

I'd consider all R&D spending to be investments. Can you provide an example of one you'd consider to not be?

If it's not capitalized (turned into an asset) then it's not an investment from an accounting perspective. Although R&D may be considered an investment by the layman, as the OP pointed out: >even if it can be defined as investment in layman terms.

It is an investment from a managerial accounting perspective (how the business really works), no matter what it's called by financial/tax accounting (how the business formally reports its status). Expenses, such as taxes or the electric bill, pay for things you use up. You can't keep them, keep using them, or resell them. But R&D is an attempt by management to produce IP assets, some of which will be used for years and can even be embodied in patents and sold, like land or machinery.

Financial accountants can't deal with the unpredictable outcome and the fact that even success is hard to quantify. They can't put the million-dollar payment in one column and the specific million-dollar asset that was purchased in the matching column, which is required to make the books balance, so they call it an expense.

It's not a case of something that is really an expense but is mistaken for an investment by "laymen". On the contrary, it is really an investment in IP asset creation by management that financial accountants have to treat as an expense, like paying taxes, due to limitations in the accounting "technology" they are required to use.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#188

Post by eli_gottlieb »

zaroth wrote: post #167
eli_gottlieb wrote: post #122

Earlier quoted context omitted.

The important question is whether something was designated a "moonshot" before it succeeded or failed, thus giving us an unbiased sample.

I think moonshot, by definition, means 15+ year timeframe to full realization. Google is a very young company, they just haven't had piles of cash to invest in moonshots for long enough for us to have seen the results. X was founded just 6 years ago, Alphabet was founded just last year! To be asking 6 years in where are all the moonshot successes already? I think this demonstrates exactly how problematic and pervasiv…

I didn't say moonshots were a bad thing. I just stated the basic standard for collecting a sample of something in a halfway unbiased way.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#189

Post by flylib »

whack wrote: post #120
zaroth wrote: post #33

I don't think it's right to equate R&D spending with "losses". Google makes a profit, not a loss, so technically it does not have losses. It has expenses, and among those, investments in future technology. If all Google could do with their cash flow was pay a dividend, that would be very sad, and it would call for a much lower P/E ratio. This article completely misstates the facts. Perhaps the way they break out thei…

Genuine question: Has Google ever achieved financial success with a moonshot project? Google Glass seems to have come closest to becoming an actual product, but it eventually crashed and burned as well. The self-driving car was a great technological success, but I really wonder how Google plans to monetize it. Years ago, when Google was the only major company doing self-driving-cars, there was a lot of buzz and poten…

would be careful to say "near-parity", google is still ahead of everyone in level 4 autonomous cars at the moment, not only that the gap may be larger then the other car companies lead you to believe.

Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016

#190

Post by redthrowaway »

sievebrain wrote: post #95
redthrowaway wrote: post #81

Earlier quoted context omitted.

Search has stagnated. Google has gotten scarily good at anticipating what I want to know, but conspicuously bad at answering hard questions. There's tons of room for improvement. Similarly, Google Maps has added features that make it a better map, and it's a great place to find what time a store closes and what their phone number is. But it's been essentially the same service, with iterative improvements, for years.…

I suspect Google Search has not actually had quality regressions, but rather that your expectations have gone up over time without you realising it.

Yes, I might have phrased that poorly. Google Search still finds relevant web pages just as well as it did 5 years ago, perhaps better. It certainly has leveraged the data it collects on me to suggest search terms in a way that's almost eerie.

But it's still a tool to find relevant pages, not a tool to find answers. It's made some progress with the semantic web and knowledge graph, but that still provides basic facts about people, places, and things. At its core, it's still a portal. It's still just a much better version of Excite. Search today feels like it did in 1997: a "solved problem" ripe for disruption. Google has the talent, technology, and data to produce something an order of magnitude better.

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