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> That's not even a lot! Apple, Google & FB have $200bn, $140bn & $65bn respectively. Dividends don't seem to be a thing, and it's basically impossible to invest this much cash internally. These companies don't have factories to build, or any kind of hard capital investments to make.

Apple arguably does have factories to build, given how utterly dependent on China it is.

This. Apple should be looking into buying a semiconductor company and building more fabs. Preferably US based. Maybe Micron or TI. Micron's market cap is ~90B. TI's is about ~170B, so probably Micron.

I really would hate to see Texas Instruments bought and buried by a coastal company. The Midwest really needs some of its own tech giants to drive their economies. I suspect TI would be absent from North Texas if Apple bought them or they'd participate in the typical nastiness of moving all engineering to the coast and leaving sales and marketing in it's wake.

Major nitpick but Texas is most certainly not part of the midwest. And acquisition is the wrong thing to fear, backwards economic policies and divestment from urban centers and education while labor protections even for high skilled employees continue to be eroded are system problems outside of the coastal hubs. Texans and midwesterners should be afraid of how their governments are dropping the ball, not of coastal companies buying out the locals.

But the bigger scare of TI being acquired is that they are a major manufacturer of commodity components and Apple is a vertically integrated consumer electronics business. It would be devastating to American semiconductor marketplace if their portfolio was no longer available.

Sure, whatever region you want to call Texas feel free to call it that. It's largely arbitrary.

The problem is that Dallas (and other areas) have been sucked dry of talent by tech companies for a while - even before the conservative economic policies you're handwaving about came into effect. Some of that is on the state for not being competitive enough, other parts of that have been on predatory practices by businesses that fuel things like state to state income inequality.

Second, I don't need to be told what to be afraid of, so your condescending tone can take a listening stance. A software engineer in Dallas Texas doesn't make near the cost of living difference between a San Francisco job while doing the same thing and that is a problem. Full stop.

That problem can be remedied by bringing more tech businesses to Texas and gating them out of the traditional coastal areas like New York, SF, Seattle, and Portland. There are other ways of remedying the problem and I'd love to hear them, but finger pointing at the Texas government without pointing at companies and other states sounds pretty fruitless.

> A software engineer in Dallas Texas doesn't make near the cost of living difference between a San Francisco job while doing the same thing and that is a problem. Full stop.

Why is that a problem? Do you feel that the same gap needs to be closed globally, or just within the US?

> finger pointing at the Texas government without pointing at companies and other states

I don't think anyone is finger pointing at the Texas government while ignoring companies and other states. GP is saying that Texas is doing thing X, coastal states are doing thing Y, leading to companies (and engineers) choosing the coastal states because they prefer Y.

> Why is that a problem? Do you feel that the same gap needs to be closed globally, or just within the US?

I'm sure you'd find it problematic if you're forced from an area just because of geo-pay. I can't build that kind of empathy for you though, you'll need to go find it.

Nice whatabboutism on the second part. Yes, I think it needs to be closed on both. These companies produce digital products, not geographically sold ones. The contribution of an engineer in one place is the same as another, as long as the impact is the same.

> GP is saying that Texas is doing thing X, coastal states are doing thing Y, leading to companies (and engineers) choosing the coastal states because they prefer Y.

That's pretty much longer form of what I just said. The state can do things differently, but the state isn't even all or most of the answer. A lot of it has to do with wage suppression, which I covered above.

Edit: I realize I come off a bit salty about this. I am. I am not conservative and this problem has personally impacted me. It's annoying to hear people speak about this with such utter lack of empathy, or rather that their political ideology comes shining through, but I get to most people it's probably just Tuesday.

I'd argue it's a bit dramatic to say I was "forced from an area" but I did move from the east coast to the Bay Area largely because pay disparity was much larger than the difference in cost of living. I saw that as an opportunity, not a punishment.

> A lot of it has to do with wage suppression

This is where I get a bit confused. Why would companies artificially push engineers to the areas where they command these disproportionately large salaries? Are you saying that they overpay engineers in general specifically to suppress wages of engineers that _are_ in Texas?

You can call it dramatic, I call it reality when I make three times in CA what I did in Dallas doing the same job.

The problem is that an engineer, doing the same job, in a state that is wage suppressed can only retire in a state with even lower cost of living. When you have engineers in coastal areas on average making ridiculous sums over their counterparts in other states when nearly all the products are subject to the same taxes and distribution pipeline that begins to sound a bit problematic, don't ya think?

The problem largely lies in reward structure: coastal engineers tend to get a lot more in terms of RSUs but will get similar cash compensation. When you add inflation and home prices (which are savings vehicles) on top it compounds the problem into what we have today. As I said, some is on the state, some is on companies.

The net outcome is that an engineer retires from SF, can move anywhere they want but picks Texas. They buy a house in cash, most likely beating out native Texans and drive the cost of goods up while salaries remain low. They live like kings while the people who actually built up a community and contributed taxes to the state get priced out. This whole paragraph is just paraphrasing state-to-state income inequality though, feel free to read up on it's effects.

> Why would companies artificially push engineers to the areas where they command these disproportionately large salaries?

Because now that this paradigm exists it's rife for exploitation. Companies will pay engineers in Texas without giving them the same RSUs as their coastal counterparts. That's a savings. So sure, they pay people in SF more but they pay everyone else substantially less (beyond cost of living differences). Therein lies the rub.

Texas seems perfectly happy to keep giving the companies tax breaks independent of this - I don’t see what this has to do with CA

I used to work for a TI software subcontractor in Portland. After getting strung along by a trainee manager from HQ the whole project was offshored. I can only imagine how the employees in TX are treated.

TI has been dying a slow death from what I've observed and heard. Outsourcing tends to be part of that, sorry it happened to you.

When I worked in Texas there was a lot of outsourcing, but usually it's because there's not enough talent in the area to meet demand. It's a cyclical effect, which is what irritates me about coastal folks trying to deny their states and companies have participated in that process.

Companies and people are leaving California in droves and coming to Texas. Cost of living in Texas is a fraction of California and Texas has no individual income tax. Texas colleges A&M and UT are excellent affordable public engineering schools. Availability and quality of medical centers are excellent. Elementary and high schools outside of the urban cities are generally excellant. Many many great entertainment and restaurant venues. State government has avoided the destructive Covid lockdown policies in California while putting in place balanced and reasonable protections.

Lusting after California salaries is a losing game when the salaries are inflated to pay for high taxes and artificially high home prices driven by a chokehold of regulations on new home building.

https://www.thecentersquare.com/california/list-of-companies...

Can anyone recommend a good area in Texas far from manufacturing, military bases, or other sources of pollution?

Bonus if far enough North to avoid freeze issues!

Honestly I would be sad to see vertical consolidation like that. But given all the hype around M1 and the translation to $$$, it wouldn't surprise me.

They really don't. And neither do they need to buy SemiConductor Companies.

Unlike most if not all other companies that outsource manufacturing. Apple still has the known how and detail view in not only the factory but the whole supply chain. They could, should they choose to, instantly assemble everything by themselves.

Compared to other companies, they are making design changes and working with contract manufacture, but they have no idea how those machines in production actually works.

Buying Semi or Fabs also doesn't make sense unless they intend to Fab for others.

> Unlike most if not all other companies that outsource manufacturing. Apple still has the known how and detail view in not only the factory but the whole supply chain. They could, should they choose to, instantly assemble everything by themselves.

They can't "instantly" assemble everything by themselves at the scale they need, because almost all their infrastructure and supply chain for that is located in China. My bet is that it would take them on the order of a decade to build up alternate infrastructure and supply changes, and that's assuming the detailed knowledge they have about their processes.

This is an interesting article about how Apple's dependence has played out: https://www.nytimes.com/2021/05/17/technology/apple-china-ce....

Perhaps, and there seems to be more movement in the direction of late. Makes sense, considering how much trouble they've had "putting money to work."

That said, Apple have a hell of job turning $200bn into factories.

The scale of money, currently... is quite something to live up to.

Amazon always has and continues to invest internally to expand e.g., new AWS regions, warehouse automation through robotics most of which are extremely capital intensive. Though your observation is right that MGM acquisition does make sense for Amazon because they OK to pay a premium to fast-track expanding their media business.

The way I see it, Amazon, as a growth machine, keeps its growth options (organic/inorganic) open and when sees an opportunity for inorganic growth they will go for it. The most recent example being their acquisition of Whole Foods. They were anyway investing in growing their brick-and-mortar presence and opportunistically acquired Whole Foods to fast-track it.

Relatedly, Amazon has to be one of the most diverse corporations ever. From AWS to media studio. Which other corporations come close?

Eastern companies like yamaha and hyaundai. dirtbikes to pianos, cars to housing

> dirtbikes to pianos

Yamaha's logo is three tuning forks. Always cracks me up seeing that on a dirtbike.

Motorcycles have forks too, but if they resonate at 440 Hz you have got issues...

Good point. The Korean Chaebol [1] is all about the conglomerate.

[1]https://en.wikipedia.org/wiki/Chaebol

>Relatedly, Amazon has to be one of the most diverse corporations ever.

That is the exact problem Steve Yegge described [1]. Americans has a world view that equals to America. Amazon doesn't even compare with Samsung in vertical integration.

And in terms of diversity, it doesn't even need to be Korea Chaebol, dozens of other East Asia conglomerate are way more diverse than Amazon.

[1] https://steve-yegge.medium.com/hurricane-china-how-to-prepar...

That was my first thought, specifically the South Korean Chaebols like Samsung

I agree, but...

2021 Amazon has AWS, which is hugely cash generative... hence the growing cash balance. They can't invest faster than it accumulates. Financially, they're like Apple, Google, Etc. now.

Also, "capital intensive" is relative. Warehouse's investment numbers tend to be publicized, because politics. A big one is $200m, and that's a "media story" number which may be higher than the real, "capital investment" amount.

Company valuations are one thing, but $10bn is a lot of capital. It's hard to actually invest that much. That's why the big software companies have so much of the damn stuff.

Diversifying used to be the norm (eg Thorn EMI, Virgin, etc). It’s more of a modern trend to specialise in one field.

What’s the provocative part?

I like the insight. What you are saying is that liquidity needs to get much deeper to account for all the currency made available and consolidated.

The idea of Tesla buying and discontinuing GM for the sake of reducing competition is pretty provocative.

That is precisely what I meant by provocative.

Amazon could pay and treat their employees better. That would be an investment that would make me consider using their service again.

Amazon already pays their Warehouse workers $15/hour or more. How much should they get paid?

$15 would be a realistic minimum wage in many places. And they can treat their workers better.

Costco is a good example of how to treat workers.

I'd start with something livable.

> I'd start with something livable

Define "livable" in the context of wages

This term is already defined.

https://en.wikipedia.org/wiki/Living_wage

https://livingwage.mit.edu/

Technically that'd be a cost, not an investment.

And we've found the problem...

> Large capital investment at meaningful scale is not part these companies' culture, or competencies.

Am I missing something? The latest Amzn 10-Q shows $45B of “Purchases of property and equipment” $11B in lease principal payments in the past year. That’s on the $42B cash on hand and $26.9B net income. Cash flow and capital investment seems like the crank Amazon has been turning for 20 years?

I think he means that Amazon isn't really an acquirer. Other than Whole Foods, I think their next biggest acquisition is Twitch? That's only two total acquisitions over ~1 billion over Amazon's entire history. For what is currently the largest market cap on earth, that's pretty shocking.

Zappos and Zoox were also both $1 billion acquisitions by Amazon

Why only consider acquisitions over $1 billion though? They have quite a few $250 million+ acquisitions that were pretty big or key players in their respective niches.

Because a billion is a nice round number, and if you compare to other companies the same size, they've had a remarkably small number of acquisitions.

Google has had Youtube, DoubleClick, Android, Motorola, Nest, HTC, Nest, Looker, Fitbit, Waze... and that's just what I remember.

Facebook has had at least Instagram, WhatsApp and Oculus, but they've been around close to two decades less.

For a company of Amazon's scale, it's lack of acquisitions is relatively surprising.

Apple does offer a dividend fwiw. The others often use cash for share buybacks which is part of why the price is so high. So it’s not entirely like they just let the money sit there.

True, this is why I offered that caveat at the end. None of what I said is true in an absolute sense.

Whether or not they pay dividends or buy back stock, the average net is large. That's why they've accumulated these record busting sums.

I don't think Amazon has done stock buy backs in almost 10 years.

If you discount the automatic stock buybacks they do to compensate for employee stock bonuses this is true. But that is still a pretty large amount of money over the past decade.

datacenters for all 4 are a huge capital investment. Perhaps less so for Apple, but Amazon, Google and Facebook all run their own datacenters and all of them will have to continue expanding their datacenter footprint if they continue to grow.

That being said, it does seem like equity markets are in a bubble. Tesla at least is absurdly overvalued. If i had signifcant stake in TSLA I would be getting out asap and let someone else hold on to shares that are probably 300% overvalued.

Amazon shares, relative to revenue, were absurdly overvalued for over a decade.

Then they weren't.

The argument for Tesla, much like Uber, is that they are going to figure out the rest. It's really almost a faith based investment, either way.

Huge yes. Huge relative to amzn & apple is a different matter.

> That's not even a lot! Apple, Google & FB have $200bn, $140bn & $65bn respectively. Dividends don't seem to be a thing, and it's basically impossible to invest this much cash internally. These companies don't have factories to build, or any kind of hard capital investments to make.

What about data centers?

All of this is relative to those companies' scale. They do, naturally, have capital investments to make. These just aren't enough to utilize their available capital, currently.

It seems the smart move in today's market is to acquire an organization for free with a leveraged buyout.