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Tech companies often spend most of their money on R&D. Manufacturing typically instead has high capital expenditure.
by cerved 7y ago
Tech companies often spend most of their money on R&D.
Manufacturing typically instead has high capital expenditure.
- philipov 7y agoWhile I agree that one would expect a tech company to spend a lot on R&D, I'm not sure how accurately this definition corresponds with what people mean when they say those words. Alphabet only had about 20% of its expenditures going to R&D in 2019, so does that mean it's not a tech company? Meanwhile, Tesla have had close to 50% of their expenditures going towards R&D year after year. Ford had less than 5% of expenditures go to R&D in 2019. By this measure, Tesla is definitely a tech company, but Alphabet might not be. I might... actually want to agree with that, but again, I don't think people who use the phrase would.
- castratikron 7y agoTo be fair R&D at 50% of revenue is massive. They are basically a university.
- philipov 7y agoActually, I looked at the wrong numbers. Their R&D is a lot more in line with other automotive manufacturers at 6.6% of total expenditures (for 2018). The majority of their expenditures go into Cost of Revenues (building and delivering the cars), with Operating Expenses being a distant second.
- xiphias2 7y agoActually Google was earlier a tech company, but it was reclassified into communications sector in 2018. https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN1F037G https://www.google.com/amp/s/mobile.reuters.com/article/amp/...
- xkjkls 7y agoWhen people say tech company they mean tech margins. There is no indication that Tesla will ever be able to achieve that.