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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

#31

Post by tyre »

zaidf wrote: post #15
kmonsen wrote: post #13

Earlier quoted context omitted.

I don't think this is true for Google. The "Moonshots" mentioned here are pretty far from Google. It is in some sense R&D of course, but it is not R&D that will benefit Google as a company.

How do you reach the conclusion that it is not R&D that will benefit Alphabet? They make it pretty clear it is a high risk high reward R&D, meaning if they hit pay dirt, it can be massively profitable for Alphabet.

Notice that GP said Google while you said Alphabet.

If they pay off, it benefits Alphabet. Maybe Google (the search engine monetized through advertising) but possibly not.

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

#33

Post by zaroth »

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 their financial statements is confusing to someone without an accounting degree. Just because "Other Bets" is negative, a growing negative number in this case is a good thing. This is showing Google has more free cash to invest in growth and has good ideas they believe in and want to pursue. I would be worried if instead they were stockpiling cash. You would then have to ask, why can't they put it to work effectively?

Of course, everything they do that is making money is no longer an "Other Bet" by definition.

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

#36

Post by honkhonkpants »

sliverstorm wrote: post #29
honkhonkpants wrote: post #26

Why should any organization have net profits at all? "Loses" here is being used to mean "spent". You can't just keep stacking up cash forever. That would be pointless and stupid.

Net profits are how you pay shareholders dividends, which are often demanded, and the futurr promise of which are the root basis of how the company can attract money through IPO

That's a sort of quaint belief about the market but it's degenerated into straight up gambling. Let me put the question a different way: why should any company have positive retained earnings?

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

#37

Post by Jach »

hueving wrote: post #16
asdfologist wrote: post #14

Earlier quoted context omitted.

That entire thread is filled with snark/speculation and lacks any actual facts. Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?

Well I'm sure the people working on it think one might take off. But if you're taking the pessimistic view it doesn't matter if they never succeed as long as the smart people are kept busy working for them.

It's a clever argument that might convince certain purse-holders, who are optimistic or pessimistic about the success, that it's in the company's best interest either way. I don't think Google's under full control of the sociopaths yet that this sort of "locked up" argument is needed, or is felt internally by very many upper level managers. It's also just not a great strategy if you're worried about potential future competitors given that employees are free citizens, not slaves, and California has no non-compete laws. Industry (let alone tech industry, let alone Californian tech industry) is littered with successful offshoots started by individuals and teams who used to work together at one company, and quit or were fired en masse to start working on something else in the same domain, taking their experience with them and owing their former company nothing. Facebook's strategy of "buy any threat" is a lot more sound, even if it too is vulnerable when the threat refuses to be bought.

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

#39

Post by prawn »

aresant wrote: post #27

This article makes it sound like Google frittered away $1b on the "X" lab last quarter. X lab includes self driving car, Goog Glass, Project Tango (editorializing here but Tango is badass!), more crazier bets (1) Ok, some crazy stuff there - pretty pretty risky. Wow $1b last quarter for that stuff. Geez corporate responsibility grumble grumble, stupid silicon valley assholes snark snark. But wait, spend 30 seconds do…

For anyone else not familiar with it, Tango looks to be phone-based AR that requires specific hardware: https://get.google.com/tango/

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

#40

Post by corpus »

The people complaining about this better not be the same Thiel worshippers who constitute most of the Google hate here.

Thiel criticizes Google/Alphabet for hoarding any cash at all. A true technology company re-invests all its excess profit.

This "loss" corresponds to less than 7% of Google's gross profits in the same quarter.

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