A Google side panel says last quarter Facebook doubled it's net income to $10 billion.
So year over year, Facebook made that money back last quarter.
If the lower settlement might have slowed year over year growth, five billion would likely be money well spent.
Particularly if there wasn't an obviously better return for the cash. When you have billions of cash on hand finding investments that size is a hard problem.
Keep in mind that the fine is an operational expense. Right off the top, there's potential double digit return from reducing taxable income. In addition, the company better maintains the book value of goodwill assets without the depositions and can borrow money at more favorable rates.
On top of that, executives and staff aren't spending time in depositions and answering tough questions from the press.
The interesting thing is figuring out why it makes sense despite my direct experience. Even though I would have preferred they gave me some of that money instead.
Executives of a certain vintage learned a lot watching the carnage from US v Microsoft. Talk about destruction of shareholder value. I would say for Facebook this is money well spent.
I’m sure there have been books or well researched blog posts you could dig up but here’s my best take:
Look at the influence and trajectory of Microsoft before and after the lawsuit. The executive team was distracted for a year. The employees were demoralized by bad press coverage. Competitors were emboldened. And for internet and mobile, Microsoft got put on the back foot before the 21st century even began.
Facebook management and board is full of people who observed and lived that experience. There is a case study of corporate distraction and they have read it.
So year over year, Facebook made that money back last quarter.
If the lower settlement might have slowed year over year growth, five billion would likely be money well spent.
Particularly if there wasn't an obviously better return for the cash. When you have billions of cash on hand finding investments that size is a hard problem.
Keep in mind that the fine is an operational expense. Right off the top, there's potential double digit return from reducing taxable income. In addition, the company better maintains the book value of goodwill assets without the depositions and can borrow money at more favorable rates.
On top of that, executives and staff aren't spending time in depositions and answering tough questions from the press.
The interesting thing is figuring out why it makes sense despite my direct experience. Even though I would have preferred they gave me some of that money instead.