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Google Ready to Bid on 700 MHz
Seppanen Style writes "The 700MHz spectrum auction looks like it's going to be heated. Google CEO Eric Schmidt has all but confirmed that Google will make a play for the spectrum that will be on offer next January. 'In effect, this could give Google control of the entire pipe between customers and Google servers, a move that could be very good for business strategy, even if the wireless network is not a major profit center. Companies never like to be at the mercy of other companies, and Google is no exception.'"
As of today, Google has a market capitalization (stock price x outstanding shares) of $160 billion. They could easily issue, say, 10% more shares and collect over $10 billion, even when considering the dilution that would cause. Even without that, their balance sheet shows total cash of over $12 billion, and zero debt.
It's not a problem for them.
"National Security is the chief cause of national insecurity." - Celine's First Law
If market cap was actually an indicator of potential success in the auction, Google would lose.
The telecoms:
AT&T: $242 billion
Sprint: $53 billion
Deutsche Telekom (they own T-Mobile): $79 billion
Verizon: $121 billion
Versus:
Google: $160 billion
Luckily, there's more to this game than pure market caps. Google is probably better able to raise cash, and may also have more cash on hand, than the telcoms. On the other hand, though, you have companies that have been around for a long time, and are fairly good at getting what they want. Regardless, I'm looking forward to the auction. A Google win would be awesome, but the actual event should turn out interesting as well.