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While you are right in your comment, in so far as what you have written, the implication that [this] "reorganization makes no difference on the financials" is n
by 001sky 11y ago
While you are right in your comment, in so far as what you have written, the implication that [this] "reorganization makes no difference on the financials" is not strictly speaking true.
Going forward, this re-organization may very well allow capital allocation to be done at various legal entities a-la project or structured finance. That way, the risk/return of the various projects can be traded on more efficiently to the benefit of both investors and google/alphabet shareholders.
This is relevant in the larger context for asset intensive, long-time maturity investment areas --like fiber, self driving cars, etc -- that have fundamentally different economics than the core business (search/ads/youtube etc).
- anjc 11y ago> That way, the risk/return of the various projects can be traded on more efficiently to the benefit of both investors and google/alphabet shareholders. How would this make any difference for the costing of projects (or businesses, now)? In terms of risks and returns. Its not like new businesses under Alphabet will be boostrapped, they'll still be the same drain/boon on resources that they always were.
- SapphireSun 11y agoNot if they allow sub-ventures to be financed semi-independently.
- eldavido 11y agoThis is a good point in an otherwise PR- and spin-heavy announcement. If Google plans to pursue capital-intensive projects a la Fiber, it'd be better to have those separated to allow use of (much cheaper) debt capital collateralized by very narrow slices of the business. Is this what you mean by "project finance"? I've heard that term before but not sure what it means.