5 ms·

A serious question: does anyone -- management, shareholders, analysts, anyone in the picture at all -- seriously think that these companies will actually find a

by snewman 10y ago

A serious question: does anyone -- management, shareholders, analysts, anyone in the picture at all -- seriously think that these companies will actually find a way to invest a nontrivial portion of the cash piles they're sitting on? (Bearing in mind that to date, year after year after year, they're unable to invest quickly enough to prevent the pile from continuing to accumulate, let alone spend it down.)

fnovd 10y ago
Have there been any incredibly disruptive & profitable markets in the past 10 years? Would hanging onto cash help solidify your place in the next disruptive & profitable market? At the end of the day, the question for these companies is: can you afford not to have cash available for The Next Big Thing?
- cheez 10y ago
  Smartphones have exploded in the last 10 years....
  - rgbrenner 10y ago
    and yet Microsoft has been unable to use their cash to secure a foothold in the smartphone market.
    - cheez 10y ago
      My understanding is they get ~$1 billion/year from licensing patents to Android manufacturers. Anyway, I wouldn't count them out just yet. It took them 5-6 years to catch up to Google Docs and these days, I often consider using Office 365 because it's local AND syncs to the cloud automatically.
  - WildUtah 10y ago
    Smartphones have exploded in the last 10 years... The lithium ion battery problems are mostly under control now.
- snewman 10y ago
  There's cash available for The Next Big Thing, and then there's $215B (Apple's current cash). They could buy, say, GM outright (market cap: $48B) and barely make a dent.
bearcobra 10y ago
I think the whole Apple car rumor is analysts trying to come up with a conceivable way they could spend a large portion of their reserves.
- asimuvPR 10y ago
  There is still something very apple-ish about that rumor. It might seem weird, but cars are becoming more like mobile phones with wheels. The mobile phone is the latest in the personal computing vision apple had (well, jobs). The car being an extension of that might be a natural choice for them to follow. A self driving car that picks you up whenever and wherever is to the car what the smartphone is to mobile phones. Who knows? They have the money and talent for a good effort.
- sah2ed 10y ago
  I think the rumor has some merit though. Apple now have their own mapping effort similar to Google and I remember watching a video at a Google sponsored event where it was mentioned that for self-driving cars to be viable, you first need a mapping solution which Google had been building for several years as Google Maps.
foobar2020 10y ago
They do, if though nothing else then through multi-billion acquisitions. Another thing is that we all know crises come every now and then. Being tight on cash when it hits the market means you'll have to let talent go to your competitors, slow down infrastructure growth, reduce research freedom.
- snewman 10y ago
  Sure, these are reasonable arguments, which are commonly used. Clearly this justifies holding on to some cash. But I question whether it justifies holding on to this much cash. At some point it has to reach diminishing returns.
- gozur88 10y ago
  The problem with spending it on acquisitions is once you reach a certain size buying other companies becomes difficult due to regulatory concerns.
petra 10y ago
Alphabet seems to be starting to find a way. Say they have a working, regulatory approved self driving car, it'll take tons of money for scaling. Same for internet balloons, and probably other stuff.
- xenadu02 10y ago
  They have enough experience with Google Fiber now. If they really wanted to put some of that cash to work they could start building fiber networks in 10 cities per year and blanket the top 50 metro areas (just to side-step arguments about how big the US is and the expense of deploying to rural areas). The reality is Google Fiber exists to scare the existing players away from squeezing too hard, but not as an actual plan to create a large profitable business to deliver actual competition. Google has orders of magnitude more capital than they would need to do that if they wanted.
  - petra 10y ago
    I'm only guessing,but since Google has no big advantage in the field of fiber, it means that their business there won't have decent margins(or returns-on-capital) like they are used to - which would make them less interested. Also another reason they may worry, is that maybe phased-array antennas may become competitive soon, so investing on fiber for the long term might be risky. On the other hand, stuff like self-driving cars should have a different competitive/economic story, so scaling may look different.

by snewman 10y ago

fnovd 10y ago

Have there been any incredibly disruptive & profitable markets in the past 10 years? Would hanging onto cash help solidify your place in the next disruptive & profitable market? At the end of the day, the question for these companies is: can you afford not to have cash available for The Next Big Thing?

cheez 10y ago
Smartphones have exploded in the last 10 years....
- rgbrenner 10y ago
  and yet Microsoft has been unable to use their cash to secure a foothold in the smartphone market.
  - cheez 10y ago
    My understanding is they get ~$1 billion/year from licensing patents to Android manufacturers. Anyway, I wouldn't count them out just yet. It took them 5-6 years to catch up to Google Docs and these days, I often consider using Office 365 because it's local AND syncs to the cloud automatically.
- WildUtah 10y ago
  Smartphones have exploded in the last 10 years... The lithium ion battery problems are mostly under control now.
snewman 10y ago
There's cash available for The Next Big Thing, and then there's $215B (Apple's current cash). They could buy, say, GM outright (market cap: $48B) and barely make a dent.

bearcobra 10y ago

I think the whole Apple car rumor is analysts trying to come up with a conceivable way they could spend a large portion of their reserves.

asimuvPR 10y ago
There is still something very apple-ish about that rumor. It might seem weird, but cars are becoming more like mobile phones with wheels. The mobile phone is the latest in the personal computing vision apple had (well, jobs). The car being an extension of that might be a natural choice for them to follow. A self driving car that picks you up whenever and wherever is to the car what the smartphone is to mobile phones. Who knows? They have the money and talent for a good effort.
sah2ed 10y ago
I think the rumor has some merit though. Apple now have their own mapping effort similar to Google and I remember watching a video at a Google sponsored event where it was mentioned that for self-driving cars to be viable, you first need a mapping solution which Google had been building for several years as Google Maps.

foobar2020 10y ago

They do, if though nothing else then through multi-billion acquisitions. Another thing is that we all know crises come every now and then. Being tight on cash when it hits the market means you'll have to let talent go to your competitors, slow down infrastructure growth, reduce research freedom.

snewman 10y ago
Sure, these are reasonable arguments, which are commonly used. Clearly this justifies holding on to some cash. But I question whether it justifies holding on to this much cash. At some point it has to reach diminishing returns.
gozur88 10y ago
The problem with spending it on acquisitions is once you reach a certain size buying other companies becomes difficult due to regulatory concerns.

petra 10y ago

Alphabet seems to be starting to find a way. Say they have a working, regulatory approved self driving car, it'll take tons of money for scaling. Same for internet balloons, and probably other stuff.

xenadu02 10y ago
They have enough experience with Google Fiber now. If they really wanted to put some of that cash to work they could start building fiber networks in 10 cities per year and blanket the top 50 metro areas (just to side-step arguments about how big the US is and the expense of deploying to rural areas). The reality is Google Fiber exists to scare the existing players away from squeezing too hard, but not as an actual plan to create a large profitable business to deliver actual competition. Google has orders of magnitude more capital than they would need to do that if they wanted.
- petra 10y ago
  I'm only guessing,but since Google has no big advantage in the field of fiber, it means that their business there won't have decent margins(or returns-on-capital) like they are used to - which would make them less interested. Also another reason they may worry, is that maybe phased-array antennas may become competitive soon, so investing on fiber for the long term might be risky. On the other hand, stuff like self-driving cars should have a different competitive/economic story, so scaling may look different.