How much money is Google losing on its moonshot projects such as self-driving cars and smart contact lenses?
Investors will find out in exactly three months. That’s when Google will report its first quarterly earnings report under its new Alphabet corporate structure.
Alphabet is the name of the new holding company that includes both Google’s traditional Internet businesses (search, YouTube, Android, etc) and the newer, ambitious projects. These other businesses will be lumped together in a category called “Other Bets” when Alphabet reports its fourth quarter financial results.
Alphabet CFO Ruth Porat said on Thursday that the company will reveal three key financial details for Other Bets:
- Capital Expenditures
It sounds like investors won’t get granular details about particular businesses, such as the revenue and profit of Nest or self-driving cars. Rather, Google will likely provide an aggregate financial number for all of its other bets, a motley crew which Porat said will include Nest, the Access & Energy business, the Life Sciences business, the Google X research lab (where the driverless car business is parked), and Google’s investment arms, among others.
Analysts estimate Alphabet’s other bets could be losing billions of dollars a year. BofA said in a note last month that the red ink could total as much as $US4 billion a year.
And Porat noted during Google’s Q3 earnings call on Thursday that spending on other businesses will be going up. In particular she flagged the Access & Energy business, the group that handles the high-speed Google Fibre broadband service.
Porat said that the “vast majority” of Google’s capital expenditures to date have been focused on the core Google business.
But cap ex on other bets will increase through next year as Alphabet continues to “execute on the growth agenda there, in particular in Access and Energy, which contains our Fibre business among other efforts.”