Blog Post

Google: Good at Search, Bad at Investments

Google (s GOOG) today announced its financial results for the fourth-quarter and full-year 2008 periods. It was an impressive performance, except:

Google said net income for the quarter that ended on Dec. 31 was $382 million, or $1.21 a share, compared with $1.2 billion, or $3.79 a share a year ago. It included one-time charges of $1.09 billion to account for the declining value of Google’s investments in Clearwire (s CLWR) and the AOL unit of Time Warner (s TWX). (via the NYT).

Those weren’t their first bad investments, either. Remember the broadband-over-powerline company, Current Communications? Sure Google is good at making money off online advertising, but when it comes to investments: not so good.

10 Responses to “Google: Good at Search, Bad at Investments”

  1. The aol invetment was a quasi legal cash transfer from one kleiner company to another.

    There was no logical purpose. And investors should sue. Google is kp’s piggy bank. Shareholders be damned.

    Aol aka defense intelligence surveillance networks Inc. Is really calling the shots which makes one wonder about just how indpt googs board really is from darpa.

    But what would you expect from a company that stole the ip for page rank from previous kp company excite and adsense from idealab!

    Why else handle a reverse Dutch auction but to avoid indpt insight into their finances?

    Is there anything to google that isn’t a fraud?

    Aol investment. Hehe. That’s quaint om.

  2. Bad investments….

    grandcentral (great service but what is going on with it)?
    picasa (still breathing but are they grabbing market share)?

    It seems that once google absorbs companies the die.

  3. Carl

    I think AOL was down the dumps long before the economy went down. Ditto on Current Communications.

    I think your thesis on media reporting the negative stories is off the mark. If you just report only the good news – well then you would call someone a lackey. I see it, and I call it.

  4. I don’t think you can single those out as bad investments. The whole market is down. BOA down 83%… bad investment? The media just like to report the negative stories to gain readers.

  5. “Once Clearwire finishes building out their network and the stock comes back up, they’ll probably get their money back anyway.”

    Remember that Clearwire is building out their network very slowly in a sluggish economy and that they don’t even have all the capital to do it yet. They have $3b of the planned $5b. What happens to Google’s investment if Clearwire isn’t completely rolled out before LTE?

  6. Scarhawk

    The investment in Clearwire isn’t just about money, it’s about building out a third network to route around the cable/DSL duopoly – helping to maintain network neutrality. In the long run it’ll be worth way more than a billion dollars to Google to keep the Internet from getting turned into a walled garden by Comcast and AT&T. We should consider it a public service for which we owe them thanks.

    Once Clearwire finishes building out their network and the stock comes back up, they’ll probably get their money back anyway. They’re just cleaning the books while it’s safe to report bad news so they can count it as a gain to earnings later.