Re:Western Digital agrees to buy SanDisk for about $19B
by petra on Wednesday October 21, 2015 @01:05PM
(#10426775)
Bit first, this is not cash lying around, this is new debt. Second ,Even if you take all of Google's investments into innovation and and look at them combined ,they would probably offer a decent return on investment. Similarly if you look at intel capital's investments , you'll probably get a nice financial story + a decent strategic lever.
Also from a pure financial perspective - sandisk has a profit of $1.22 Billion.That would take 15 years to repay. Isn't risky to make such long term investments in i a single investment , in tech , which is a dynamic field usually ?
1. Cash lying around in your bank account is usually a poor use of working capital (you are effectively "losing" money by it sitting in the form of cash)
2. Investing in "innovation" is always risky. Look at how many internal Google apps get scrapped a year or two into launch. They effectively write those off and it's a direct loss to Google's bottom line.
3. "Innovator's Dilemma" - big companies realize they are not the best suited to invest in innovation, hence why startups and buying them are actually a net positive for large businesses.