Seth Fiegerman, reporting for CNN Money:
Alphabet, the parent company of Google, saw sales from its
so-called moonshot projects hit $185 million in the quarter ending
in June, more than doubling sales from the same quarter a year
ago. But the company is losing far more money from those efforts.
Losses for “other bets,” as Alphabet characterizes the segment,
rose to $859 million for the quarter from $660 million a year
Those bets include risky, capital intensive projects like
self-driving cars and Google Fiber, which delivers high-speed
Internet. Most of Google’s sales in this group are said to come
from Fiber as well as Nest, and Verily, a life sciences division.
Those mounting losses may put a dent in Alphabet’s pitch to Wall
Street that it can be more responsible with its spending.
Alphabet as a whole reported $4.88 billion in profit for the quarter, so these moonshots are well within the company’s means, but you can see why investors might want to see the company shut these things down.
They’re obviously worried about it. Last week they granted Conor Dougherty of The New York Times behind-the-scenes access, which included this observation:
What all these efforts have in common, besides imaginative power,
is that they do not make any money. X’s budget and head count are
a secret, but shareholders’ perceptions about the division were
aptly summed up by a poster board in its Mountain View, Calif.,
offices. It had a picture of a burning $100 bill followed by,
“Investors think we do this.”
The combination of big ideas, lofty rhetoric and a strict code of
secrecy has made X a source of endless speculation and conspiracy
theories. The one you hear most frequently, usually from
competitors and venture capitalists, is that X is a giant public
relations plan to distract regulators from Google’s search
business, which is under scrutiny around the world.
Cynical though that sounds, it points to something that seems
fundamentally true: Many of history’s great corporate research
efforts, like Bell Labs and Xerox PARC, have come from companies
that were monopolies or close to it.
★ Thursday, 28 July 2016