Google spending on the rise

by Darren

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From all of the plans that Google has been announcing this year, you can be sure of a few things. One is that expense are going way up at the company, as they continue to derive most of their revenue from search engine advertising. They’ve expanded into tons of new areas, but so far they haven’t derived a ton of revenue from any of them.

Google has spent a ton of cash lately. They’ve purchased the GooglePlex and now are opening a research center in Michigan that will employ 1,000 employees. Yes, that’s right, they’ll be adding 1,000 employees in the research department.

This year the company has spent $1.5 billion on building operations centers. Considering the company did $6.138 billion in 2005, you’d have to consider their expenditures to be incredibly optimistic, especially considering the transitory nature of their current success. There in what would be called a “no-moat” business by Buffettites. There’s no barrier to entry, and the market can change in a heartbeat. Rumors are now swirling that Google might become an ISP. At that point, you know their expense structure is no longer indicative of a high-profit internet company.

The next quarterly earnings report promises to be interesting.

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