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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

#41

Post by ipsum2 »

askafriend wrote: post #2

I don't see anything wrong with this approach, especially since the company can actually sustainably afford to keep placing these bets. And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all. When Alphabet tries a "moonshot", they come away learning a lot about whatever problem it is that they were trying to tackle. They build expertise in-hous…

> And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all.

Internally, they're referred to as 'bets, a pun on the company name Alphabet.

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

#42

Post by _jtai »

chaostheory wrote: post #28
hueving wrote: post #17

Earlier quoted context omitted.

Stock is up 4% after hours. I'm not sure which "wall street" strawman you are attacking, but it doesn't appear to be the one that actually trades stock.

ok, my criticism is directed towards Wall St analysts. I could be wrong but it feels like the vast majority of them see X as a money pit that's hampering Alphabet as whole. I've been hearing this for about a year now. If ad revenue wasn't up, the chorus would be louder.

I also don't know if that's entirely true either. After the earnings came out, it looks like quite a few Wall St analysts changed their recommendation to outperform, with a target price of 900+, and in general, it seems like many analysts all have pretty high target prices assigned to Alphabet.

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

#43

Post by Animats »

We need more detail in financial statements. "Operating loss of $859 million in Other Bets" is not enough disclosure for a public company.

It's not research that spends that kind of money. It's attempts to buy market share by selling at a loss that do. Or existing businesses with a high burn rate that aren't profitable. That number includes Nest and Google Fiber, both of which are in production but perhaps not doing too well. Does it include Android? Google's various attempts to build and sell phones? Motorola?

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

#44

Post by Steko »

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…

> "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2)

The fact that most of those things aren't huge money losers undercuts your argument though. Nest is making money. Google Ventures is $300 million a year, Fiber invested $100 million in KC in 2013, meanwhile this segment was $3.6 billion in the red last year.

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

#45

Post by eric-hu »

This article highlights the myopia of public investment. Other comments have mentioned the self driving car. That's a work still in progress, and likely has been a net loss quarter over quarter.

Highlighting the research arm's quarterly losses is like setting an FM radio to 10 Mhz* and then declaring there's nothing on air.

* FM Radio bands start around 80 Mhz in the modern world.

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

#46

Post by chaostheory »

_jtai wrote: post #42
chaostheory wrote: post #28

Earlier quoted context omitted.

ok, my criticism is directed towards Wall St analysts. I could be wrong but it feels like the vast majority of them see X as a money pit that's hampering Alphabet as whole. I've been hearing this for about a year now. If ad revenue wasn't up, the chorus would be louder.

I also don't know if that's entirely true either. After the earnings came out, it looks like quite a few Wall St analysts changed their recommendation to outperform, with a target price of 900+, and in general, it seems like many analysts all have pretty high target prices assigned to Alphabet.

Just because they like Alphabet as a whole doesn't mean that they like X. Am I wrong?

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

#47

Post by smitherfield »

Steko wrote: post #44
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…

> "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2) The fact that most of those things aren't huge money losers undercuts your argument though. Nest is making money. Google Ventures is $300 million a year, Fiber invested $100 million in KC in 2013, meanwhile this segment was $3.6 billion in the red last year.

Yes, but they could* be taking write-downs on their investments in e.g. Nest.

*I haven't looked at their financial statements.

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

#48

Post by zaidf »

tyre wrote: post #31
zaidf wrote: post #15

Earlier quoted context omitted.

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.

I assumed GP meant Alphabet since public entity is Alphabet, not Google.

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

#50

Post by afsina »

tyre wrote: post #30

> The cost for the Mercury, Gemini and Apollo programs was more than $25 billion at the time more like $110 billion in today's world.[1] Moonshots are expensive. Doesn't mean they aren't worth it. [1]: http://news.utexas.edu/2014/07/21/anniversary-shows-us-that-...

Author of that article is like an apologist for excessive government spending. To me, if government did not spend that amount of money on space exploration, probably private sector would have achieved even better things faster with lower cost.

Besides, about the author : "..Wallace Fowler is the director of the Texas Space Grant Consortium.".

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