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Why are companies like GoDaddy allowed to just lose hundreds of millions of dollars every year? I don't get it! The cheap domain thing is not a capital intensi

Why are companies like GoDaddy allowed to just lose hundreds of millions of dollars every year? I don't get it! The cheap domain thing is not a capital intensive industry, there are thousands of IT companies that can sell you a domain out there, it is not as if you need a factory or hundreds of thousands of staff to get into the business, so cheap isn't necessarily going to get you into a monopoly position - e.g. de Beers - so that they can have the market to themselves. If they were making cars instead of domains and selling everything at what amounts to a loss year in, year out, some EU type of organisation would come along with an anti-dumping tariff to put an end to it. Why is it with tech companies that GoDaddy style business models are allowed to persist? Sure some of those losses are due to acquisitions, but, again, why can companies that don't make money allowed to buy up companies that do make money?

djloche 12y ago
In case you are serious about not getting it: you can operate at a loss in a number of situations: if you have profits in reserve, if you have available credit to float the difference in revenue, or a combination therein. You cannot bleed forever, only as long as you have capital to push onward. If you have access to a ton of credit, or have a ton of money in the bank, you can take losses for quite some time. I haven't looked too deeply at their internals, but some companies choose to (properly) mark down existing assets or investments on their books to current market value at certain times for strategic tax purposes. Eg. if you have a warehouse full of stuff you can't sell, but profit from other divisions the right thing to do is to write down those assets to market value (sometimes that is zero, but not always)
larrys 12y ago
"Why are companies like GoDaddy allowed to just lose hundreds of millions of dollars every year? " What do you mean "allowed"? You mean "allowed" by the government or "allowed" by investors who perhaps may know something that you don't? Investors make mistakes for sure and bet on the wrong horse. But if they are they are making a calculated risk by using information that you are not privy to or knowledge that you don't have. (And I can see from some of the comments on this post that is not unusual.)

djloche 12y ago

In case you are serious about not getting it: you can operate at a loss in a number of situations: if you have profits in reserve, if you have available credit to float the difference in revenue, or a combination therein. You cannot bleed forever, only as long as you have capital to push onward. If you have access to a ton of credit, or have a ton of money in the bank, you can take losses for quite some time. I haven't looked too deeply at their internals, but some companies choose to (properly) mark down existing assets or investments on their books to current market value at certain times for strategic tax purposes. Eg. if you have a warehouse full of stuff you can't sell, but profit from other divisions the right thing to do is to write down those assets to market value (sometimes that is zero, but not always)

larrys 12y ago

"Why are companies like GoDaddy allowed to just lose hundreds of millions of dollars every year? " What do you mean "allowed"? You mean "allowed" by the government or "allowed" by investors who perhaps may know something that you don't? Investors make mistakes for sure and bet on the wrong horse. But if they are they are making a calculated risk by using information that you are not privy to or knowledge that you don't have. (And I can see from some of the comments on this post that is not unusual.)