Comment by chollida1 | Hacker News Reader

Comment by chollida1 | Hacker News Reader

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> The relationship between Oracle and NetSuite goes back decades. Zach Nelson, NetSuite’s CEO, previously ran Oracle’s marketing operations in the 1990s. Oracle co-founder Larry Ellison is NetSuite’s largest investor. As of March, Ellison and his family owned about 45.4 percent of NetSuite’s common stock, according to a company filing. Ellison has “control over approval of significant corporate transactions,’’ according to the filing.

Hmm, I wonder if the NetSuite board will approve this:)

Man, Microsoft has its OS and Office revenue to

Google and Facebook have their advertising revenue

Oracle has its licensing revenue

Amazon has its everything store revenue.

Apple has its iPhone revenue.

The big tech incumbents all figuratively print money each quarter.

If the long reported bubble burst ever gets around to happening, it's hard not to see them as the big winners. With piles of cash on hand and cash reserves growing can anyone make the case that they don't become the lender of last resort to cash strapped startups?

Side note, I'm surprised that Oracle is still running with Safra Catz and Mark Hurd as co-CEO's. I figured that that setup along with a very strong willed founder in Ellison, would cause some spectacular implosion at some point:)

>Side note, I'm surprised that Oracle is still running with Safra Catz and Mark Hurd as co-CEO's. I figured that that setup along with a very strong willed founder in Ellison, would cause some spectacular implosion at some point:)

It's because Safra Catz is a master operator while Hurd is a good IR and market-facing leader. Of course, Ellison is the visionary.

I read this as Oracle realizing that cloud is real and that they need to buy as many sources of cloud data silos as possible to build up their fortress of customer data.

Can you clarify what makes Safra Catz a master operator?

http://www.fool.com/investing/general/2015/05/20/does-safra-...

Can't Amazon, Google, and Facebook (less sure about the others) all essentially be characterized as Berkshire Hathaway?

I.e. Develop a business that generates large cash flows, then relentlessly plow that money into more profitable side ventures. Except in this case they didn't buy an insurance company and instead developed a product that generated those flows.

I think you're missing the way Warren Buffett and Berkshire invests.

He takes low risk, profitable companies with proven track records and strong management teams. Geico, Fruit of the Loom, building products and materials etc. Its a very different mindset then what Google is doing when it invests in self driving cars.

Every company thats profitable re-invests those profits in some way. Trying to lump the way Google or Amazon uses their excess cash is different then the way Facebook does (Facebook builds moats mostly) and definitely different then the way Berkshire does.

My main point on making the comparison was the scale at and frequently with which it's done rather than the investment strategy.

(1) Core technology & monetization -> (2) Cash Flow -> (3) M&A to Fuel (1) -> (4) Goto 2

Looks different at that size than it does for smaller entities. And if you have a revenue stream generic enough to feed on a variety of inputs, then you have huge flexibility in what you can purchase. And you can likely afford to pay more because you've got efficiencies of scale on your side (including access to hyper-scale amounts of data).

What you've described looks more like Amazon's strategy. It's probably more correct to say Google & Facebook are copying Amazon rather than BH.

The core of BH has ~20 employees. Warren Buffet always calls out his subsidiary CEOs for doing a great job, because BH couldn't exist in its current format if he had to manage day-to-day operations in any subsidiary.

The steps in Buffet's algorithm are the same, but the emphasis is different. Amazon builds moats and cashflow, while BH buys stable companies that already produce cashflow. BH doesn't need moats, only profit. Amazon, Google, FB need both moats and profit.

Buffet's algorithm looks more like:

  - (1) Identify stable, profitable businesses that WB understands
  - (2) if they're a good bargain, and it moves the needle on BH stock, buy
  - (3) goto (1)

They may use lot's of cash, they may be plowing, they may be relentless but their track record is decidedly mixed. Building franchises from smaller seedlings is hard and risky. Not comparable with Berkshire Hathaway that focuses on low risk investments. They are more acting like venture funds.

Amazon, Apple and Microsoft have managed to build some new profitable businesses over time with Amazon having done the greatest leap. The advertisement giants seem to struggle to gain traction - lots of projects but revenue streams less impressive.

As I understand it, Buffet has a negative interest rate loan from insurance premiums (essentially if you write 100M of insurance carefully on Jan 1st, and you only pay out 96M, then your customers have given you a yearly loan of 100M at an interest rate of -4%)

As such you can invest that money in assets able to throw off 96M in cash, like mattress sales or stock dividends, even if the return on purchase cost of the stocks is 2 or 3%. If anyone was to borrow 100M to invest they would not see a nice 6-7% return, but for most of past 40 years would see a negative return.

The cost of capital for Google will be different - most of their ad revenue is upfront but is short timescale (say a week) so it's not annual like BH. At best their cost of capital is probably zero. So their range of investments is smaller compared to BH.

And let's be fair - the brand is different. Google fiber is one thing. Google Coke? Google Mattresses?

Google is almost DNA bound to swing for the fences, and one suspects their will be no investor festivals for Serge and Larry in their 80's because the returns on that strategy don't often work.

But betting against Google is also a bad strategy :-)

I think most companies can be characterized this way: "Develop a business that generates large cash flows, then relentlessly plow that money into more profitable side ventures."

Generally "plow that money into less profitable side ventures" though is the way it ends up, despite the best intentions. Cash cows are the profitable bits, hard to beat Microsoft Office say with a new venture, you want something that is growing not saturated above short term profits.

Except that Google totally failed at this and facebook will probably fail at it too. And Amazon is just regular M&Aing with the random subsidiary spinoff happening.

YouTube, Android, Chrome, Maps, Apps... it's going terribly

Only YouTube was acquired (Android and Maps were too, but not really). YouTube does OK, the rest not so much. Just because they are popular doesn't mean they are profitable. And they are most definitely not independent.

On the other hand, Waze, Orkut, Nest. They spent billions on those and all they got was a lousy t-shirt.

Isn't Waze data incorporated into Google Maps? If that data significantly improves the product and helps them stay the market leader in maps, its value, while hard to quantify, has to be pretty huge.

The Nest acquisition seems to be part of a long term robotics strategy, so probably too early to call on that one.

Orkut I'll give you--Google seems to have basically thrown in the towel on social networking.

I think you guys are here just to argue and make excuses for google. I get it that you are fanboys, but please...

The GP said that they are like Berkshire Hathaway - basically a conglomerate of profitable companies. This simply isn't true. Acquiring a company to incorporate their assets into yours is just M&A, nothing like BH.

Nest is a miserable failure.

I'm definitely not a Google fanboy by any stretch. I agree they aren't really much like Berkshire Hathaway--was only taking issue with your assertion that all those acquisitions were worthless, which seems pretty unfounded to me.

I don't know a whole lot about the Nest story--seems the consensus now is that it didn't go well, but if Google retains engineers and IP that help them down the line with their robotics push, it's still probably worth something to them, though perhaps that will wind up being a lot less than they paid in 2014.

Orkut was a 20%-time project, not an acquisition.

Android makes them billions in advertising and is profitable.

No, Adwords makes them billions in advertising revenue.

And Android isn't helping ensure AdWords is fed with traffic despite what their competitors do? (E.g. a hypothetical MS or Apple monopolized mobile ecosystem who could choose to default to non-Google)

Android provides AdWords and Google Analytics with cross-device data, which is critical to advertisers who have lots of cross-device touchpoints before converting. Cookies break across devices, so having a device identifier and knowing pretty definitively who is logged-in lets them tie it back to the individual.

This is the difference between mobile/tablet performance looking unprofitable vs. profitable because the conversions are attributed to them.

I'm thinking of the non-acquisitions. Google Fiber, Verily, X.

X who knows but they're supposed to be moonshots, but Fiber and Verily can hardly be called failures.

The tech companies you've mentioned are not like Berkshire's model at all.

Berkshire is a conglomerate that looks for proven, established, cash-flow-positive businesses. See's Candy, for instance, requires no debt and is a sure bet every holiday season.

On the other hand, self-driving cars and WiFi balloons are extremely speculative and definitely aren't cash generating.

"lender" ?

I would assume they would use their cash stockpiles to acquire/acquihire any promising startups.

Mark Hurd is very talented and HP was stupid to oust him after the scandal surrounding him. Oracle saw a tremendous opportunity and hired him immediately. Larry Ellison's ability to see past public opinion and make tactical long term maneuvers is one of his few admirable qualities.

Without Googling it, Do you even remember what Mark Hurd's scandal was about? I don't...

Sexual harassment, same as almost every scandal involving a powerful man.

I don't think it was so much sexual harassment as it was that he embezzled corporate funds to pay the woman in question.

I'm sure the social justice warrior types see it another way though.

It doesn't matter what SJWs see, what matters is the potential for a company damaging lawsuit if they did nothing and left him in place. I'm sure media concerns factored in, but not as much as legal costs.

Sorry, off topic here.

But do you think oracle might be looking to jump into the Machine Learning/AI BandWagon

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