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> Like AWS and Azure, chances are GCP/Google's internal hardware division bills internal teams similarly to external customers (especially as Sundar continues t
by rescbr 4y ago
> Like AWS and Azure, chances are GCP/Google's internal hardware division bills internal teams similarly to external customers (especially as Sundar continues to demand cost cuts)
Having worked on such large conglomerates it’s closer to friends & family discount than from large external company discount.
There’s also transfer pricing and other accounting ways to improve numbers.
This is so widespread that one such company had <company color> dollars (internal purchases) and green dollars (external customers) pricing.
- scarface_74 4y agoThat's simple Managerial Accounting 101. Every major company operates the same way. When Disney+ "buys" the right to stream the latest Marvel movie from Marvel Studios, the company as a whole has to back out the revenue so not to count it twice. But still show Disney+'s profit.
- lotsofpulp 4y agoWhy would they have to “back out” revenue”? Revenue for one department has to be an expense for another if they are buying and selling from each other, and that would cancel out in the company wide financials. Disney+ buying from or selling to Marvel would not show up as profit or loss for Disney.
- scarface_74 4y agoLet's take a simpler example. Apple Retail Stores and Apple corporate. For awhile Apple Store profits were broken out separately. Making up numbers: It costs Apple $800 to make a MacBook. It "sells" the MacBook to Apple Retail for $900 wholesale. Apple corporate now has revenue of $900 from the Mac it sold. Apple Retail sells the same Mac to the end user for $1000. Apple Retail now has revenue of $1000. Apple Corporate claims revenue of $900 Apple Retail claims revenue of $1000. Apple claims a revenue of $1900. But it has to back out $900 of revenue so it doesn't double count it. Apple wants to show that Apple Retail is profitable. I used Apple instead of Disney in the example because it is much simpler to show one item being transferred from Apple to Apple retail than it is to show a group of movies being transferred to Disney and Disney selling a subscription.
- deleted 4y ago[deleted]
- rottingchris 4y agoRevenue is independent of expenses. It cancels out when you calculate profit.
- scarface_74 4y agoI spoke about "revenue" and then I said "profit". I was inconsistent. "Profit" would have been cancelled out. "Revenue" would have had to be backed out.