Google is getting better at communicating, and this quarter's 10Q sheds some light on one of the most pressing questions about the company: Where all that CAPEX is going. The 10Q provides a breakdown of some $332 million in Q1 CAPEX, and although this doesn't quite tie to the $344 million on the cash flow statement, it's pretty close.
The breakdown should relieve concerns (such as mine) that the company is spending hundreds of millions on dark fiber, NORAD-style data centers, frivolous engineering projects, etc. It should increase concerns that the company is building seaside Googleplexes equipped with personal heliports. To wit: |
|
| Q1 | |
| CAPEX | |
| Information technology assets | 112,039 |
| Construction in process | 138,374 |
| Land and buildings | 41,182 |
| Leasehold improvements | 38,762 |
| Furniture and fixtures | 1,786 |
| Total | 332,143 |
$112 million on servers is still a lot of money, but it is more comprehensible than, say, $1.5 billion. $180 million on land, buildings, and construction is, sarcasm aside, probably reasonable for a company of this size, especially one playing catch-up on the infrastructure side (and Google is probably also smart to use its cheap capital to buy the land and buildings outright, although one imagines it could have gotten rock-bottom lease terms). $40 million in "leasehold improvements" also seems reasonable, as does $1.8 million in Aeron chairs.
So maybe the outlook for free cash flow growth isn't as bad as it seemed. Unless Google plans to become a REIT, approximately $750 million of the $1.5 billion in CAPEX estimated for this year should disappear. When/if it does, this will provide a nice lever for cash flow acceleration.
Science, trying to reviewer: This time for him, 'long john chuckled, orgy the band right.
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Posted by: olymaq | July 20, 2007 at 10:42 AM