Leaving aside its huge and immensely profitable search business, Google (GOOG) has managed to lose money in almost every other business it has started or bought. YouTube is probably at the top of that list.
Google’s latest foray into burning cash is to help improve the energy grid and cut the cost of electricity. According to The New York Times, “Google is now considering large investments in projects that generate electricity from renewable sources.”
The sharp drop in Google’s shares can be placed at the feet of concerns that the company spends too much money and that its margins will be compressed by any slowdown in the advertising business unless it cut costs. That has helped push the search company’s stock to a level where it has not traded since late 2005.
If the management at Google is anything, it is smart. Perhaps that is university smart and not intelligence based on practical experience
Ethanol and solar stocks have been wounded by falling oil prices, dropping government subsidies, and rising commodities prices. Shares in solar giant Suntech (STP) are down from a 52-week high of $90 to about $12. Biofuels operator Verasun (VSE) has fallen from $17.75 to $.70.
Doing good has some limits when the shareholder’s money is involved. The two founders of Google and its CEO have billions of dollars in personal wealth. Let them put up the capital to make the world “green”.
Douglas A. McIntyre