Analyst Predicts Google Will Bid to Lose at Auction

I think that Verizon and/or AT&T will bid enough to shut out Google even if they decided that they wanted the spectrum. Google would be a big disruption to their existing business and they will do what it takes to keep them out.

I think Google will bid the minimum of $4.6B to make sure the spectrum is leased to someone(thereby preventing a new auction later w/o open access rules) and then try to lobby Congress and the FCC to make sure the winner(the telcos) honor the rules about open access.

P.S.> That block of spectrum would have been put up again without open access rules if no one bid the minimum. Most analysts think Google got in to the bidding and will bid the minimum to make sure that doesn't happen.

Even if they [Google] successfully lobbied Congress and the FCC to make sure the winner (assuming it is AT&T/Verizon) honors the rules about open access, that doesn't change that nothing will result in them actually not honoring the the rules.

We've already seen countless of examples where the telcos have gone around the law to get what they want, and nobody in our government has done anything about it. And we all know how Martin loves telcos.

Here is a thing, you guys ever looked how many most talented analysts Google hires?! All of their decision are made after EXTENSIVE calculations. There is no BS there, there is no got feeling. Everything is cold numbers run through the best statistical minds out there. Their stock price is not hype (though there is a bit of it in there), investors are willing to bet on all those brains within Google. And Google knows how to treat those brains right, so they have an army of the best of the best.
Whatever comes out of this auction is exactly what Google intended.

I am very happy with them and I am also very happy that my retirement fund has them in the mix.

There is no BS there, there is no got feeling.

What is a "got feeling"?

When you can get the milk for free.

Sorry, I disagree.

Google does hire the smartest folks on the planet.

But that doesn't produce absolute results.

Instead, they let them crank out stuff, throw the s** up on on the wall, and see what sticks. Witness the "success" of Google Video, and the subsequent financial performance of the YouTube acquisition. Witness the "free Wifi" efforts. What happened to Deja? How will they make any money on GrandCentral?

There is a limit to how much you can give away and show a profit. Google may be the best at it, but they can't prevent someone else from coming along and giving away more.

They are actually graduated Engineers from various disciplines that includes EE, ME, ChemE, CE, MSE, plus Computer Engineering and Computer Science.

Computer Analyst doesn't even compare. These people actually have engineering degrees. MIS majors and their ilk have stunk up the IT industry to an alarming measure. When you see companies investing in real engineering you'll notice that they tend to actually produce goods and services and not processing paperwork and speculating on trends and more.

There was a disgusting trend back in the late 90s where companies thought they were getting 2 for 1 by hiring an MIS major or other type of systems analyst. They discovered they weren't good enough in sales/marketing and were bottom rung for actual engineering work.

Glad to see the trend is reversing. Companies like Apple [disclosure: worked there] and Google hire people who actually know the difference between Statistics and Probability and Statistics for Engineers. The differences are enormous.

you've outdone yourself.

can you think of a "much more better" strategy?

I LOVE YOUR JUNK MAIL.

Some of the SMARTEST people out there don't have degrees! By limiting yourself to the hiring of degreed people, you are severely limiting your talent pool.

My mentor (a famous TV pioneer) had a saying: "Schooling interferes with your education". It's quite true.

Ever heard of "Street smarts"?

Or do I have to remind you that Bill Gates, Paul Allen, Steve Jobs, Steve Wozniak and Michael Dell all dropped out of college?

Of course, maybe you WANT a corporate universe where everyone thinks alike?

The FCC uses the John Nash equations (A Beautiful Mind) for their spectrum auctions. A genius friend of mine analyzed the equations (on his Cray) and has determined that the only one who benefits from these auctions is the FCC! Bidders actually pay MORE in spectrum auctions then they would pay on the open market for the same or similar spectrum. What's contributing to the frenzy this time is the characteristics of this particular frequency range (it has a great combination of range, building penetration, cost of transmission, etc.). This will likely go for ten billion dollars.

Whether who ever gets it can ever break even is anyone's guess. The landscape is littered with companies who spent so much acquiring RF spectrum that they could never afford to build it out.

There are no bargains to be had...whatsoever.

i hope they bid they price up higher then 4 billion i dont like at&t Verizon or any of them and want them to spend as much money as they can

Google "Long Term Capital Managment". Summarize to BBR what you find.

I think Google knows that if they don't get the spectrum, the open access rules won't apply; Verizon et al will simply ignore the rules and get the FCC to turn a blind eye. Since Google clearly has plans for the spectrum, they'll go for it.

they will and end up doing what they do best monopolizing/ with government approval.

How much does Google have to spend?

I think the analysts are right, but remember Google has very smart people and lots of computer power. If I were in their position, I'd have a project to create an economic simulation to predict what each bidder will or could do. Then use the results to make a bid with the optimum outcome for themselves.

Google would be able to make more money from the spectrum than their competitors. I think that should be factored in.

Hi axus,

I agree. Google is making 30b on 10. They can squeeze out more profit with the increased bandwidth better than anyone because their business is 100% "virtual".

VB