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Google's spending spree rattles Wall Street
Alphabet, the parent company of Google, racked up $7.7 billion in capital expenditures for the first three months of 2018 on everything from real estate to undersea cables.
The company reported strong growth in sales and profit for the quarter on Monday, fueled by the strength of its advertising business and helped by a lower tax rate. But its staggering investments appear to be rattling Wall Street. Google's stock fell as much as 5% in early trading Tuesday.
"The big story from the results was the significant rise in expenses," Brian Wieser, an analyst with Pivotal Research, wrote in an investor note Monday night.
Alphabet spent $2.4 billion in March to buy Cheslea Market in Manhattan to expand its office space in New York City. The company also said it invested in data centers, production equipment and undersea cables.
Also at Bloomberg and Reuters.
(Score: 5, Informative) by Snotnose on Wednesday April 25 2018, @04:19PM (7 children)
Alphabet is investing in their long term future. Wall street is pissed because they may make $0.01 / share less next quarter.
Don't even get me started on Eddie Lampert and Sears, or Romney and Bain capitol. Our economy is run by leeches, for leeches.
Tell me again why it's starting to look like China is going to clean our clocks.
When the dust settled America realized it was saved by a porn star.
(Score: 2, Interesting) by Anonymous Coward on Wednesday April 25 2018, @04:30PM
The summary doesn't say what percentage of those expenses were related to the new tax cuts, but that WAS the biggest selling point of the tax breaks, that companies would use that money to invest in their people and capital expenditures. Maybe those investors are getting worried that some companies are actually doing that instead of just paying out bigger dividends. Those bastards!
(Score: 4, Insightful) by Runaway1956 on Wednesday April 25 2018, @05:24PM (3 children)
I'm having pretty much the same problem you have with this story. Any business owner, large or small, should be investing in his business. That's how a business grows. The small town landscaper who won't purchase pruning shears, edgers, trash bags, mower blades, and all the other accoutrements of the trade is going to go out of business. As big as Google and companies are, they too can put themselves out of business by failing to invest.
Wall street would prefer that Google keep their funds liquid? That way a handful of upstart companies can get the lead on Google, and threaten Google's domination of the various markets that Google is in. At which point in time, those same Wall Street know-nothings would begin whining and crying that "Google has failed to make meaningful investments for the past xx years, opening the doors for competitors!"
Note that I am not defending Google, so much as I'm mocking the idiots on Wall Street. Google has other sins to atone for, not for investing in the future.
(Score: 3, Insightful) by Anonymous Coward on Wednesday April 25 2018, @09:19PM
(Score: 2) by TheReaperD on Thursday April 26 2018, @12:54AM
Wall Street's obsession with expenditures borders between irrational paranoia and self-abuse. It's realistic in modern Wall Street to have a company report that they made the biggest profit of any company in history but, because their capital expenditures increased by 2%, have their stock drop 5%. In fact, I believe this kind of scenario happened to Apple. Wall Street insiders would see this as a proper response and that the company deserves to be punished, up to their executives being fired, because of their expenditure increase. Note, in this scenario, I haven't even brought up why the expenditures increased because Wall Street doesn't care; as for as they're concerned all expenditures are bad expenditures.
Ad eundum quo nemo ante iit
(Score: 3, Informative) by SunTzuWarmaster on Thursday April 26 2018, @02:50PM
They got a big infusion of repurposed off-shore money and used it to make a pile of infrastructure investments on-shore.
Government: "You can bring this money back at a low tax bracket"
Google: "Cool, I bring it back. Done."
Google: "I've got all this liquid US-cash sitting around... Time to buy some US-stuff."
They bought land near their offices, undersea data cables, and land for data centers. WTF is the Street upset about? Worst case scenario they sell the land/cables.
Its not like *GOOGLE* isn't going to use *DATA CENTERS* *DATA CABLES* and *OFFICE SPACE*. That's, like, what their whole company is... Data centers, cables, and office space to program the centers/cables.
(Score: 2) by stretch611 on Wednesday April 25 2018, @07:24PM
I feel the same conflict...
And the point of all the business tax credits was to have businesses increase spending in order for the trickle down theory that everyone else will be better off.
Here is a company taking their overseas cash, bringing back to the US and spending it... only to be penalized by Wall St.
Of course this will have the intended effect of businesses and CEOs/Boards taking more profit due to the tax code changes... on the off chance that wasn't the real intention in the first place.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 1, Interesting) by khallow on Wednesday April 25 2018, @11:38PM