Google Earnings Reveal $3.6 Billion Lost On 'Moonshots' In 2016 (cnn.com) 92
Thursday Google revealed earnings results for 2016 showing the total loss for their "other bets" division had reached $3.6 billion. An anonymous reader quotes CNN :
The "other bets" portion of its business includes ambitious projects like self-driving cars, life sciences research and high-speed Internet access... Alphabet shuttered a project to beam Internet to rural areas with solar-powered drones, halted the expansion of its costly Google Fiber effort, and forced Nest to cut costs and pay for its own legal and PR expenses. At the same time, the company has moved other moonshot projects closer to market. In December, Alphabet spun off its self-driving car program into a separate company called Waymo and began working on partnerships with automakers.
Google's CFO says going forward they'll "continue to calibrate the magnitude and pace of investments".
Google's CFO says going forward they'll "continue to calibrate the magnitude and pace of investments".
Not every single research project pays off... (Score:5, Insightful)
But the ones that do more than pay for the ones that don't
News at 11
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Innovation is massively dangerous to wall street and investors. Investing in it frequently returns only loss, not investing in it may render your portfolio empty. it's better to collaborate and do away with it.
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Not every single research project pays off... But the ones that do more than pay for the ones that don't
But when pharmaceutical companies use this same approach, they are Teh Eeevil.
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Not every single research project pays off... But the ones that do more than pay for the ones that don't
But when pharmaceutical companies use this same approach, they are Teh Eeevil.
The pricing schemes of the pharmaceutical companies are the evil part of their business practises.
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Re:Not every single research project pays off... (Score:5, Insightful)
No, the pharmaceutical companies have managed to pick the the "We Do Evil" moniker because of a bunch of less-than-stellar behaviors
- Spending more money on advertising than research
- Pushing the bounds of advertising, both to the public and to professionals to rather dubious levels
- Pushing the prices of older, well established, simple drugs to sky high levels - just because they can
- Lobbying the spineless Congresscritters to keep drugs from other (actually healthier, safer) countries out of the US unless the go through a US company.
To be sure, they aren't the only morally limited players. Congress gets big hug for the above mentioned cowardice and the inability to fund the FDA to decent levels. The Executive Branch has had it's fair share of screwball ideas (Centers for Medicare and Medicaid 'Security'). Doctors and hospitals haven't looked out for patient interests in decades. Insurance companies have never looked out for anybody other than themselves.
And finally, Americans want Tesla healthcare at Trabi prices.
Capitalism is a bad way to run an economy although arguably better than anything else we've played around with. But whatever it is we're doing in the US (It isn't really capitalism) isn't working at all.
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Spending more money on advertising than research
Right. You spend money on advertising as you see necessary to sell your product so you can stay in business.
Pushing the bounds of advertising, both to the public and to professionals to rather dubious levels
So what you're really thinking about there is the poor state of critical thinking skills in the average person who watches TV?
Pushing the prices of older, well established, simple drugs to sky high levels - just because they can
Because selling what you have, while you can, so you can also spend billions on other things that don't make any money, is part of how you manage to avoid bankruptcy.
Lobbying the spineless Congresscritters to keep drugs from other (actually healthier, safer) countries out of the US unless the go through a US company.
Talk to the politicians who love to act through the infliction of ever more regulations. Happily, one of the
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Spending more money on advertising than research
Right. You spend money on advertising as you see necessary to sell your product so you can stay in business.
Pushing the bounds of advertising, both to the public and to professionals to rather dubious levels
So what you're really thinking about there is the poor state of critical thinking skills in the average person who watches TV?
You don't need to advertise health products unless you can't convince doctors that they're a healthy, necessary solution. So you make a Superbowl ad instead, utterly mislead non-doctors (i.e. the rest of us) and have them pester their doctors for a prescription.
You're essentially blaming people for not having medical degrees. You are a complete and immoral idiot.
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You don't need to advertise health products unless you can't convince doctors that they're a healthy, necessary solution.
Not everybody goes to doctors for common ailments, and even when they do, times may change and people may not be aware of new solutions. And not all doctors are equally knowledgeable.
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> And finally, Americans want Tesla healthcare at Trabi prices
Actually, I think they'd mostly be happier with Toyota Camry healthcare at Toyota Camry prices instead of the Chevy Nova healthcare at Bentley Mulsanne prices they're paying now.
You know, like those people who live in countries where they can have a whole baby [babycenter.com.au] by cesarean in a private hospital for less than the cost of a couple of Xanax [imgur.com].
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But the ones that do more than pay for the ones that don't
News at 11
Nowadays, Google does not do R&D, they buy the companies that have promising products or services. Lets not sweat the small stuff, lets profit where we can in big stuff ways.
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Accounting (Score:5, Insightful)
It's crap like this that's why we can't have nice things. Specifically, Google Fiber is not a loss. Accountants put it on the books as a loss, but it's not. It's just an expensive investment in physical plant with a long payoff period. It may takes years, even decades, but it's not like people are going to stop using this new-fangled thing called the Internet.
Wall Street has been the death of American innovation. If money spent doesn't earn a profit in the next quarter, Wall Street doesn't like, it, doesn't want it, and doesn't understand it. The stock price of Tesla Motors is a fine example. Here we have a company investing hugely in physical plant, and Wall Street has no idea what to do with it, so the value of TSLA fluctuates by 50% of its value, all the time. So-called "financial analysts" don't even know how to talk about it. It doesn't fit into their neat little boxes.
(And there's a job that's just ripe for automation. It wouldn't even take a sophisticated neural net. 90% of the financial "analysts" in the world could be replaced by some templates and a bucket of Markov chains, driven by a small shell script.)
So Google will shut down Fiber, having utterly failed to modify the behavior of the incumbent ISPs. And we will all pay for it. And pay and pay and pay and pay... It's Comcastic!
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Economics used to be a complex subject.
Now it's pretty simple:
CEOs and shareholders demand asymptotic stock price increases over a very short period of time.
The buzzword for that is, "greed."
The end.
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Times too uncertain for long bets?
With google fiber it is even more bizarre. It is widely known that last mile telco returns are investments which routinely break even in a decade, there should be surprises about the initial capex. Not to mention that google completely ignored the synnergic effects.
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CEOs and shareholders demand asymptotic stock price increases over a very short period of time.
Your response addresses neither stock price nor immediate gratification; both context parameters for "greed," in my post.
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Short sightedness and excessive risk aversity are consequences, I'm interested in inherent causes of it. Calling it "greed" is a bit too nebulous - there's always profit motive, regardless of market strategy.
Running a company isn't a netflix binge.
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Inherent cause: Greed.
Netflix binging isn't profitable.
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I agree.
I'm 71 years old and I grew up admiring AT&T and Bell Labs [wikipedia.org].
Nokia Bell Labs (formerly named AT&T Bell Laboratories, Bell Telephone Laboratories and Bell Labs) is an American research and scientific development company, owned by Finnish company Nokia. Its headquarters are located in Murray Hill, New Jersey, in addition to other laboratories around the rest of the United States and in other countries.
[Emphases mine.]
I was in awe of the fantastic news that came out of that lab. It was the gold standard for risk-taking and production of marvelous technologies. It was home to world-class scientists.
You're familiar with those moments when we think to ourselves, "Hey! Whatever happened to ...?"
Yeah, Bell Labs.
--
"Those who do not learn history are bound to repeat it; those of us who do are bound to predict it." ~ © 2017 CaptainDork
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What happened to smart investors going long for decade spans?
What happened is that long term investing has become MORE common. If you ignore HFT (which is market-making, not investing), average stock hold time has been going up for decades.
The myth that investors today are more demanding of immediate profits is basically BS, and there are many companies with high stock prices and low profits that are investing for the long term. Amazon is a good example. That wouldn't have been possible a few decades ago.
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That's how I invest and I've done extremely well by doing this. Many of my investments are in companies that do a lot of R&D and I've done quite well from this. One of my investments that has done extremely well the investor blogs keep complaining about the company spending a lot of money. Generally, established companies that invest a lot in R&D tend to do fairly well. Startups have been and probably always will be a risky venture, but when they succeed the payouts tend to be big. Companies investi
Things used to be better (Score:2)
Things aren't what they used to be. And they never were.
Are the people of today greedier, than they were 50 or 100 years ago? Can you substantiate such a claim?
The end? Oh, no! Clearly, what we are witnessing is a market failure [blogspot.com] — KKKapitali$m is revealed once again to be inherently incapable of providing Internet-service to the poor via solar-powered drone — which means, it should be nationalized. Then, the selfles
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Economics and I are no stranger.
There was a time when only formal training could explain multi-variable effects.
Now there are only two variables:
1.) CEO greed
2.) Shareholder greed.
That explains the moon shots by the major players (Facebook, Google, Apple, Microsoft, etc.) who are burning cash, at flame-out rates, on unicorns rather than investing in R&D, which is way too slow to for both 1.) and 2.).
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... rather than investing in R&D
The moonshots ARE R&D.
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No.
Moon shots are off core competency and tangential to to greed.
The major players have way too much cash on hand are out of ideas regarding core competency.
I've lived the movie and it doesn't end well.
I worked at Mobil Oil as a suit and they branched out into insurance, real estate, retail (Montgomery Wards) because they had cash to burn and they were already out of ideas regarding exploration, and they'd milked crude oil almost to the point of excess.
They got bought out for a song.
Apple is a good example.
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I think you're close, but what it is, is an extension of the greed panic.
When core competency has maxed out, there's all these cash reserves that are not helpful to the primary need to increase CEO and shareholder well being.
Desperate times call for desperate measures, and the big players have to go off script and scramble to make more money.
They do that by purchasing companies that have nothing to do with what they do.
In the next step, we'll see big the companies sell off the satellite businesses in an eff
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You are still blaming people's "greed" for something you dislike, while neither confirming nor denying (despite a direct question), that people have become greedier today, than they were 50 and/or 100 years ago.
The question, thus, is no longer why is Google doing certain things, but why is CaptainDork dodging a question. And I'm not interested...
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"Greed doesn't need a source of blame." ~ © 2017 CaptainDork.
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Gigabit to entire towns is a loss-maker not just in terms of decades.
In the UK, the only non-former-government-monopoly provider was NTL. Who, after 20 years of putting in cable, went bust. Literally, they were bought up after being near bankruptcy (by Virgin Media), including all their assets for a cut-down price, and since then any new VM rollouts have had to be built-in to the cost of building a housing estate. The number of places served by VM is pretty pathetic, it's FTTC only, and they've had to re
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The long haul costs are pretty trivial these days, the problem is still mostly last mile. Not in terms of technology, but legislation, leases, slush fund to get dig/pole permits and more, and that is assuming there are no state ordinances explicitly foiling metro net development like it is common in the US.
It indeed is similiar to real estate development in many ways. Needless to say UK has one of the most fucked up real estate markets,
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Google Fiber is not a loss. Accountants put it on the books as a loss, but it's not. It's just an expensive investment in physical plant with a long payoff period.
Unless you're an accountant working for Google, you can't know that.
Google Fiber may not be a loss to the general public, but it is a loss to Google, who apparently could not get enough ROI with their test rollouts to continue doing it. This makes sense if you think about it economically. Even if they did roll it out to all the other cities, all that they would've accomplished is turn a bunch of monopoly markets into competitive markets, and their income will never reach what the previous ISP was getting
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You describe a certain kind of investor, I suppose, and one that is too common in some quarters. But not all of us are expecting instant dividends or great leaps in share prices so we can sell at great profit. There are investors who view investments as long-term strategies, with steady growth over time, rather than obsessing over every dip in revenue or profits.
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It's crap like this that's why we can't have nice things ... long payoff period. It may takes years, even decades ... Wall Street ... death of American innovation
No, Wall Street has all sorts of happy investments in companies that DO take years and years to get a small number of viable products (out of many expensive failures) to market. It's call pharmaceuticals. Bio-tech in many forms is long ball, and money continues to pour into those companies, with investors knowing full well that there will be years between ideas and viable products, with most ideas going down in flames. The difference between some young tech company like Google dabbling in a random grab-bag
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There is an insightful talk by Clayton Christensen on this topic:
https://youtu.be/rHdS_4GsKmg [youtu.be]
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> expensive investment in physical plant with a long payoff period.
Maybe there's a payoff. Maybe.
I work for an ISP in Seattle that is connecting a few buildings because CenturyLink can't offer DSL to much of the city due to old wiring and Comcast, that has the cable monopoly over much of the city, isn't expanding service. In my building with 95 units, we spent around $75k in one-time costs for telco-quality microwave to the building, routers, switches, and labor. That might seem too large, but figure
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Of course, if that's the only viable Internet service, you'll probably eventually end up with 95 units * $60 = $5700 per month, or $68,400 per year. If everybody signs on, you'll pay for the cost in a little over a year. And if only four customers sign on over the long term... well, then you picked the wrong building to wire, and maybe that's why CenturyLink didn't bother to hook it up.
That's the economic reality: Most underserved areas are underserved for a reason: they aren't profitable. If you really
Could you explain that? (Score:2)
Could you explain that? How is Microsoft anti-internet? How does Microsoft affect what people do in their private lives?
Re:AI and analysts (Score:1)
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What's the point of doing a test rollout if they can't later decide it isn't feasible?
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In fact, forget the Markov chain... and the templates.
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sure, but NEST is a total loss, and all the robotics acquisitions are a write off (nobody even wants to buy them from google now)
You conflate investment with speculation, disprove (Score:2)
Tesla has $8 billion in assets and $7 billion in liabilities. They are currently worth $1 billion. Their stock valuation is $40 billion, the market values them at $40 billion.
Why the huge discrepancy in what they are worth in terms of assets and liabilities versus what people are willing to pay for the stock? It's not because they are making a bunch of money - Tesla is losing money at the rate of almost a billion dollars per year. It's because people think Telsa might make a lot of money ten years from now
Time Value of Money (Score:2)
It's just an expensive investment in physical plant with a long payoff period. It may takes years, even decades, but it's not like people are going to stop using this new-fangled thing called the Internet.
It doesn't work like that [wikipedia.org]. Unfortunately [wikipedia.org].
I want Comcast to die too, but if the free market is going to kill it then the people doing the investing have to be convinced that the payoff (adjusted for risk) is worth more than other projects they could invest in.
You can't ever say "eventually you'll make it back" and expect that to be a compelling argument. I mean, if it rate of return fails to keep up with AAA debt, it's an objectively stupid investment. And if the rate of return fails to keep up wit
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I've canceled my cable internet and switched to cellular. I have FIOS in my area, too, but there's more competition in cellular, so us lighter users (not streaming Netflix) can get a better deal. It shouldn'
You oversimplify, vastly (Score:2)
It also fluctuates because it's investing hugely in physical plant far beyond it's projected needs - and because it's projected needs far exceed it's proven capacity. Then there's the doubts about about how many Model 3's will actually sell, and doubts about Tesla's ability to actually
Go Google! (Score:1)
While I question the viability of some of the projects, I hope Google continues to push ahead with R&D. So many companies are one hit wonders because their big investors want to milk the companies for short term profit. One the companies is killed off and the corpse picked clean, they move on to a new victim. When Amazon plowed into cloud services, the outcry from many was immediate from those looking to make a fast buck. By plowing earnings back into R&D and taking paper losses, Amazon was look
they lost because they sold them (Score:2)
The CEO, Sundar Pichai, should be nuked for his stupidity.
Background. Donations? Incompetence. (Score:2)
Interestingly, Wikipedia says Sundar Pichai's salary is $150 million per year. It must be tough to survive on so little income. Maybe we should send him some money.
To me, the management of Google seems less and less competent [slashdot.org]. The management of Microsoft by Satya Nadella seems, to me and many others, UTTERLY
Good point. (Score:2)
However, I think it is especially difficult for someone from a very different culture to manage a U.S. company.
Re: Background. Donations? Incompetence. (Score:2)
Money not well spent. (Score:2)
Apparently, most of that money went toward ammunition for actually trying to shoot the Moon, until someone Googled "moonshot". After that, they also Googled "moonshine" and then sold their stock in rock polishing products.
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Pure research is such a waste (Score:1)
Look at all the money Bell Labs pissed away inventing the transistor. And what did their stockholders get out of that?