5 ms·

The meaninglessness of $8.45b relative to amazon's scale is mind boggling. It represents 0.5% of their market cap, 20% of their cash-on-hand, nevermind their bo

The meaninglessness of $8.45b relative to amazon's scale is mind boggling. It represents 0.5% of their market cap, 20% of their cash-on-hand, nevermind their borrowing capacity @ near 0%. If a problem is worth the Jeff/Andy's personal attention, it's worth spending $8bn on. I'm a broken record but, current equity prices and financial climate generally makes massive consolidation very likely. Antitrust, or fear of is the only restraint... and it is not very restraining. Unless Apple & Google are going to start issuing dividends/buybacks on an epic scale (doesn't seem likely), they have no way to put cash they have to work (besides vanguard/bitcoin). Google would need to do 10 Waymos (in for about $20bn so far) simultaneously, to invest what they need to invest on internal projects, but even their one Waymo is dubious. Acquisition is the only remaining option. Consider that these companies can currently afford to buy whole industries outright, perhaps without involving a bank. Does Waymo need a friend? Why not buy it Ford & GM? Anything outside the S&P 10 is a snack. They literally have cash enough for both lying around... and these deals are never all cash. 5 more years on the current trajectory, and the VOC/EIC days will look quaint.

dawnerd 5y ago
They could increase wages for their non-tech workers to start
- dalbasal 5y ago
  Technically, that'd be increasing their expenses rather than capital investment. They could also, in theory, build schools in central africa. They could even pay their taxes. I think acquisitions are more likely though.
  - muxator 5y ago
    What's the most appropriate word for this? There could be many, but I am a bit tired of justifications. For me it's greediness, distillated.
    - golergka 5y ago
      That's the same honourable pursuit of self-interest that have built the modern world of abundance that we live in.
    - proto-n 5y ago
      Capitalism? Greed is a very human emotion, corporations are like very powerful sociopaths. No-emotion machines that optimize for a single end goal (shareholder money) within the given ruleset: the law. (Or more realistically whatever they can get away with while still turning profit, ie profit is greater than whatever the repercussions cost).
      - potatoman22 5y ago
        In many ways, Capitalism is fueled by greed.
        FredPret 5y ago
        That’s the genius of it. Why fight human nature? As parent said, corporations are restricted only by the market and by the legal system, so it’s up to the voters to implement effective taxes and rules as needed
        nickthemagicman 5y ago
        'voters' in America = gerrymandered district super pac funded politicians The actual people have no say whatsoever.
        FredPret 5y ago
        I wouldn’t agree with “no say whatsoever” but of course constant reform is needed in any society.
        NaturalPhallacy 5y ago
- metalliqaz 5y ago
  "lol" -Google/Apple/Amazon/etc CEOs
flavius29663 5y ago
For all the green energy virtue signaling, Bezos & co. could achieve the greening of the US with their own money (and also turn a small profit).
magicalhippo 5y ago
> The meaninglessness of $8.45b relative to amazon's scale is mind boggling. My coworked compared it to the Dogecoin marketcap of $44b... kinda puts things in perspective.
- rhino369 5y ago
  Crypto "market cap" isn't really comparable to the market cap of companies. Nobody would (or could) ever buy Dogecoin for 44b. But companies are usually purchased for more than market cap.
  - archie_diak 5y ago
    Er, yes they would. Thousands of people already have, that's why its 44bn. It's a market cap not a paper valuation. Are you suggesting that if someone wanted to buy Doge outright they could pay less than it's market cap?
    - rhino369 5y ago
      There is no mechanism to buy all Doge and the "market cap" of Doge includes lost coins. If you bought all of Doge, its value would be gone since it would be like it didn't exist. You might as well calculate the market cap of baseball cards. It's just not the right way to measure the worth of a crypto. Put another way, if Doge owners decided to collectively sell it would be worth 0.
      - archie_diak 5y ago
        Hypothetically if some whale wanted to 'buy' Doge say to shut it down or something, they would probably have to spend a lot more than the market cap and as you yourself point out they still wouldn't have bought all the Doge that existed. OP was comparing amounts i.e $8bn seems like peanuts when 'joke' coins are hypothetically worth more than $44bn, and not really comparing market caps (which doesn't really make sense, again as you yourself pointed out).
paulpan 5y ago
In this vein, $8.45B seems a bargain for the likes of Apple to instantly booster their very limited TV+ offerings. Was this an exclusive, closed door negotiation between owners of MGM and Amazon? I'm perplexed how the final price isn't a lot higher due to a potential bidding war between all the streaming giants. Even Netflix would benefit - if anything to force competitors to pay more.
- twoodfin 5y ago
  What about MGM’s back catalog makes Apple TV+ qualitatively more compelling to your marginal subscriber? Versus say spending that same $8.5B on new content? There’s not much “forward looking” IP of value tied to MGM except the Bond franchise, and it sounds like the Broccoli’s aren’t giving up control of that in this deal.
  - manquer 5y ago
    Not yet. The key is to keep adding properties and unlock other deals, eventually Amazon/Apple could convince broccoli in ways MGM never can try. Deeper pockets, way better distribution etc. It took several deals for Disney to line up MCU fully. They spent a lot on Pixar, star wars and MCU , fox acquisitions to become the force they are today. Without these acquisitions, Disney would also be largely a back catalog like MGM being sold today . The theory is that sum of the properties are worth more than each individually.
  - loceng 5y ago
    Very easily are a few million people who'd be willing to have access to the Stargate library as part of a subscription + hopefully they start production again of at least Stargate Universe; it's premise would make for an awesome game too.
fairity 5y ago
Worth noting that based on AAPL's latest 10-Q, the vast majority of their cash is invested in corporate bonds, which have a nominal annualized return of ~6%. I'm sure the financial value of any acquisition is pitted against this alternative.
- dalbasal 5y ago
  In theory, sure. In real business culture, there is an imputis (especially for tech companies) to "maKe money work." If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves. More importantly, The ability to reinvest profitably is a sign of horizon, at least traditionally. I stress "in theory," because theory is a long way from practice when it comes to modern tech giants. The theory is financial theory... how companies are financed. In theory, equity investment is a way of financing companies. Google and Facebook did not need to be financed by the time they became publicly traded. They never had debt. Software companies don't require capital investment to expand, like a theoretical "firm" does. In practice, public markets have no role in financing companies per se, they're only there to provide liquidity.
  - fairity 5y ago
    > If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves. This is what they're effectively doing, in practice. AAPL has conducted ~$500B in share buybacks since the commencement of their buyback program in 2013. Their current cash and cash equivalents sits at ~$200B. So, one could say that of the $700B AAPl could have returned to shareholders, it returned $500B (or most of it).
    - dalbasal 5y ago
      I'm not sure we should accept "returned to shareholders" at face value. Nothing is really returned to shareholders. Shareholders own that money (as they own all Apple's assets) before the buyback. After the buyback, they no longer own the money... but share value has (in theory) not changed because it now represents a larger portion of this smaller asset.
asperous 5y ago
They actually are doing pretty large buybacks though: https://www.barrons.com/articles/tech-giants-have-ramped-up-stock-buybacks-apple-is-the-champ-51619780412 https://www.barrons.com/articles/tech-giants-have-ramped-up-... Apple recently $77B in buybacks, Alphabet $8.5B, Facebook $3.9B
- dalbasal 5y ago
  True, but I don't think buybacks are likely to be scaled sufficiently to solve the "problem." Apple, maybe. They do have a dividend paying history and they don't like to spread. The Alphabet & FB buybacks represent about 5% of those companies' cash reserves... not enough to change anything. Apple have $200bn, though I'm not sure if this is net or gross of the buyback. I think of these buybacks more as supporting evidence to what I said previously. There is a hell of a lot of "what are you going to do with all this cash" pressure on these companies. That said $77bn (I've seen $90bn reported) is a truly stupendous sum. Has there ever been a buyback at this scale?
  - totalZero 5y ago
    Apple does the largest buyback in the equity markets. Their derivative-based ASR is larger than the entire buyback program of many major companies. https://s2.q4cdn.com/470004039/files/doc_financials/2021/q2/Q2'21-Return-of-Capital-Timeline.pdf https://s2.q4cdn.com/470004039/files/doc_financials/2021/q2/... At $77B, that buyback program amounts to a $300m bid for Apple stock every trading day....much to the delight of executives whose compensation is tied to share price performance. https://www.cnbc.com/2020/09/29/apple-ceo-tim-cook-receives-first-major-stock-grant-since-2011.html https://www.cnbc.com/2020/09/29/apple-ceo-tim-cook-receives-...
- aero-glide2 5y ago
  They could have used that $77B to fund fusion research, carbon capture research, build private space stations and put man on Mars, but no they wanted to make their already high share price even higher.
  - 5y ago
prvc 5y ago
>The price is about 37 times MGM’s 2021 estimated EBITDA - or almost triple the enterprise value-to-EBITDA multiple that Discovery’s deal implied for AT&T’s content assets - according to Reuters Breakingviews. Was there another offer for slightly less than $8.45B? What kind of thinking would lead them to that figure, rather than a different one?
totalZero 5y ago
> they have no way to put cash they have to work Apple could have built the most incredible semiconductor mega-hub in the world with the money it spent on dividends and buybacks in the past decade. In-house R&D is still a thing. Capital expenditure is still a thing. Pay raises for rank-and-file staff are still a thing. Please don't suggest that acquisitions, buybacks, and dividends are the only ways for Apple and Google to put their free cash flow to work. Not to mention that both companies carry debt.
- dalbasal 5y ago
  Waymo is Google's big, speculative in-house R&D project. It's pretty big. They're in for $20-$25bn so far, and it'll require that much again before viability^. That's over a decade, and it is pretty risky. Meanwhile, besides search, most of their big successes were acquisitions: adwords, youtube, android, docs... all acquisitions at core. All extremely cheap, in retrospect. Tesla joining the elite "tech company" ranks has made for some good juxtaposition. They are a "textbook" company, because the textbook more or less assumes that firm = manufacturing. The way they were financed (pre-insanity equity markets), the way they consume capital, etc. Apple, Alphabet, FB, etc aren't like this. ^if

dawnerd 5y ago

They could increase wages for their non-tech workers to start

dalbasal 5y ago
Technically, that'd be increasing their expenses rather than capital investment. They could also, in theory, build schools in central africa. They could even pay their taxes. I think acquisitions are more likely though.
- muxator 5y ago
  What's the most appropriate word for this? There could be many, but I am a bit tired of justifications. For me it's greediness, distillated.
  - golergka 5y ago
    That's the same honourable pursuit of self-interest that have built the modern world of abundance that we live in.
  - proto-n 5y ago
    Capitalism? Greed is a very human emotion, corporations are like very powerful sociopaths. No-emotion machines that optimize for a single end goal (shareholder money) within the given ruleset: the law. (Or more realistically whatever they can get away with while still turning profit, ie profit is greater than whatever the repercussions cost).
    - potatoman22 5y ago
      In many ways, Capitalism is fueled by greed.
      - FredPret 5y ago
        That’s the genius of it. Why fight human nature? As parent said, corporations are restricted only by the market and by the legal system, so it’s up to the voters to implement effective taxes and rules as needed
        nickthemagicman 5y ago
        'voters' in America = gerrymandered district super pac funded politicians The actual people have no say whatsoever.
        FredPret 5y ago
        I wouldn’t agree with “no say whatsoever” but of course constant reform is needed in any society.
        NaturalPhallacy 5y ago
metalliqaz 5y ago
"lol" -Google/Apple/Amazon/etc CEOs

flavius29663 5y ago

For all the green energy virtue signaling, Bezos & co. could achieve the greening of the US with their own money (and also turn a small profit).

magicalhippo 5y ago

> The meaninglessness of $8.45b relative to amazon's scale is mind boggling. My coworked compared it to the Dogecoin marketcap of $44b... kinda puts things in perspective.

rhino369 5y ago
Crypto "market cap" isn't really comparable to the market cap of companies. Nobody would (or could) ever buy Dogecoin for 44b. But companies are usually purchased for more than market cap.
- archie_diak 5y ago
  Er, yes they would. Thousands of people already have, that's why its 44bn. It's a market cap not a paper valuation. Are you suggesting that if someone wanted to buy Doge outright they could pay less than it's market cap?
  - rhino369 5y ago
    There is no mechanism to buy all Doge and the "market cap" of Doge includes lost coins. If you bought all of Doge, its value would be gone since it would be like it didn't exist. You might as well calculate the market cap of baseball cards. It's just not the right way to measure the worth of a crypto. Put another way, if Doge owners decided to collectively sell it would be worth 0.
    - archie_diak 5y ago
      Hypothetically if some whale wanted to 'buy' Doge say to shut it down or something, they would probably have to spend a lot more than the market cap and as you yourself point out they still wouldn't have bought all the Doge that existed. OP was comparing amounts i.e $8bn seems like peanuts when 'joke' coins are hypothetically worth more than $44bn, and not really comparing market caps (which doesn't really make sense, again as you yourself pointed out).

paulpan 5y ago

In this vein, $8.45B seems a bargain for the likes of Apple to instantly booster their very limited TV+ offerings. Was this an exclusive, closed door negotiation between owners of MGM and Amazon? I'm perplexed how the final price isn't a lot higher due to a potential bidding war between all the streaming giants. Even Netflix would benefit - if anything to force competitors to pay more.

twoodfin 5y ago
What about MGM’s back catalog makes Apple TV+ qualitatively more compelling to your marginal subscriber? Versus say spending that same $8.5B on new content? There’s not much “forward looking” IP of value tied to MGM except the Bond franchise, and it sounds like the Broccoli’s aren’t giving up control of that in this deal.
- manquer 5y ago
  Not yet. The key is to keep adding properties and unlock other deals, eventually Amazon/Apple could convince broccoli in ways MGM never can try. Deeper pockets, way better distribution etc. It took several deals for Disney to line up MCU fully. They spent a lot on Pixar, star wars and MCU , fox acquisitions to become the force they are today. Without these acquisitions, Disney would also be largely a back catalog like MGM being sold today . The theory is that sum of the properties are worth more than each individually.
- loceng 5y ago
  Very easily are a few million people who'd be willing to have access to the Stargate library as part of a subscription + hopefully they start production again of at least Stargate Universe; it's premise would make for an awesome game too.

fairity 5y ago

Worth noting that based on AAPL's latest 10-Q, the vast majority of their cash is invested in corporate bonds, which have a nominal annualized return of ~6%. I'm sure the financial value of any acquisition is pitted against this alternative.

dalbasal 5y ago
In theory, sure. In real business culture, there is an imputis (especially for tech companies) to "maKe money work." If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves. More importantly, The ability to reinvest profitably is a sign of horizon, at least traditionally. I stress "in theory," because theory is a long way from practice when it comes to modern tech giants. The theory is financial theory... how companies are financed. In theory, equity investment is a way of financing companies. Google and Facebook did not need to be financed by the time they became publicly traded. They never had debt. Software companies don't require capital investment to expand, like a theoretical "firm" does. In practice, public markets have no role in financing companies per se, they're only there to provide liquidity.
- fairity 5y ago
  > If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves. This is what they're effectively doing, in practice. AAPL has conducted ~$500B in share buybacks since the commencement of their buyback program in 2013. Their current cash and cash equivalents sits at ~$200B. So, one could say that of the $700B AAPl could have returned to shareholders, it returned $500B (or most of it).
  - dalbasal 5y ago
    I'm not sure we should accept "returned to shareholders" at face value. Nothing is really returned to shareholders. Shareholders own that money (as they own all Apple's assets) before the buyback. After the buyback, they no longer own the money... but share value has (in theory) not changed because it now represents a larger portion of this smaller asset.

asperous 5y ago

They actually are doing pretty large buybacks though: https://www.barrons.com/articles/tech-giants-have-ramped-up-stock-buybacks-apple-is-the-champ-51619780412 https://www.barrons.com/articles/tech-giants-have-ramped-up-... Apple recently $77B in buybacks, Alphabet $8.5B, Facebook $3.9B

dalbasal 5y ago
True, but I don't think buybacks are likely to be scaled sufficiently to solve the "problem." Apple, maybe. They do have a dividend paying history and they don't like to spread. The Alphabet & FB buybacks represent about 5% of those companies' cash reserves... not enough to change anything. Apple have $200bn, though I'm not sure if this is net or gross of the buyback. I think of these buybacks more as supporting evidence to what I said previously. There is a hell of a lot of "what are you going to do with all this cash" pressure on these companies. That said $77bn (I've seen $90bn reported) is a truly stupendous sum. Has there ever been a buyback at this scale?
- totalZero 5y ago
  Apple does the largest buyback in the equity markets. Their derivative-based ASR is larger than the entire buyback program of many major companies. https://s2.q4cdn.com/470004039/files/doc_financials/2021/q2/Q2'21-Return-of-Capital-Timeline.pdf https://s2.q4cdn.com/470004039/files/doc_financials/2021/q2/... At $77B, that buyback program amounts to a $300m bid for Apple stock every trading day....much to the delight of executives whose compensation is tied to share price performance. https://www.cnbc.com/2020/09/29/apple-ceo-tim-cook-receives-first-major-stock-grant-since-2011.html https://www.cnbc.com/2020/09/29/apple-ceo-tim-cook-receives-...
aero-glide2 5y ago
They could have used that $77B to fund fusion research, carbon capture research, build private space stations and put man on Mars, but no they wanted to make their already high share price even higher.
- 5y ago

prvc 5y ago

>The price is about 37 times MGM’s 2021 estimated EBITDA - or almost triple the enterprise value-to-EBITDA multiple that Discovery’s deal implied for AT&T’s content assets - according to Reuters Breakingviews. Was there another offer for slightly less than $8.45B? What kind of thinking would lead them to that figure, rather than a different one?

totalZero 5y ago

> they have no way to put cash they have to work Apple could have built the most incredible semiconductor mega-hub in the world with the money it spent on dividends and buybacks in the past decade. In-house R&D is still a thing. Capital expenditure is still a thing. Pay raises for rank-and-file staff are still a thing. Please don't suggest that acquisitions, buybacks, and dividends are the only ways for Apple and Google to put their free cash flow to work. Not to mention that both companies carry debt.

dalbasal 5y ago
Waymo is Google's big, speculative in-house R&D project. It's pretty big. They're in for $20-$25bn so far, and it'll require that much again before viability^. That's over a decade, and it is pretty risky. Meanwhile, besides search, most of their big successes were acquisitions: adwords, youtube, android, docs... all acquisitions at core. All extremely cheap, in retrospect. Tesla joining the elite "tech company" ranks has made for some good juxtaposition. They are a "textbook" company, because the textbook more or less assumes that firm = manufacturing. The way they were financed (pre-insanity equity markets), the way they consume capital, etc. Apple, Alphabet, FB, etc aren't like this. ^if