Apple Math

Last year marked the 10th anniversary of Google’s stock market debut, a milestone that showcased the company’s extraordinary success in the business and commercial realms. Today, Google stands among the largest and most respected corporations worldwide. Notably, investors who participated in the initial public offering (IPO) have reaped substantial returns, with every dollar invested then now valued at around 12 dollars. However, it is important to note that the IPO was initially perceived as a failure on various fronts. Google sold fewer shares than anticipated and set the offering price toward the lower end of its projected range. The utilization of a Dutch auction mechanism for share allocation created confusion and has been rarely employed since.


While not without external factors, such as market conditions influenced by dot-com scars, and an unproven business model at the time, the IPO in August 2004 could be considered a financial and treasury low point in what has since been an extraordinary performance. This article examines Google’s growth and commercial success through a “treasury lens” to gain insights into key metrics driving one of the world’s largest corporate treasury and investment operations.

To provide context, we compare Google’s numbers with two other prominent ICT giants: IBM, which went public over a century ago, and Microsoft, which held its IPO in the mid-1980s.

Fact 1: Google’s Asset Base has skyrocketed by 1,200% to $130 billion in 10 years

Over the past decade, Google’s asset base has expanded by nearly 1,200% and has surged by a staggering 3,800% since the IPO. In contrast, IBM’s assets increased by only 11%, while Microsoft’s grew by 140% during the same period. Different assets require varying degrees of active management. For instance, goodwill and intangibles are passive from a treasury perspective, while cash demands daily management.

Fact 2: Google currently holds a $60 billion Cash Reserve

While organizations manage cash flow and sometimes deal with surplus cash, few amass a cash mountain like Google. As per their latest 10-K filing, Google reported cash plus cash equivalents totaling nearly $60 billion, representing growth of close to 3,000% since the IPO. Although Microsoft has not experienced the same exponential growth in cash reserves as Google, it remains incredibly cash-rich and ranks second only to Apple in terms of corporate cash reserves.

Cash constitutes approximately 50% of Google’s asset base, a ratio roughly similar to that of Microsoft but about five times greater than IBM’s. Although Google and Microsoft operate in different sectors (advertising and business software, respectively), both companies share the remarkable ability to consistently convert revenue and profits into cash. Consequently, they find themselves in a situation where their underlying businesses generate more cash than can be reinvested in further business activities.

Fact 3: Google traded over $100 billion worth of securities last year

Trading volumes, defined as the sum of investment purchases and sales reported on each company’s cash flow statement, provide a sense of the scale of investment activity conducted by the respective companies. Although it may not entirely capture the complexity of managing investments, it offers valuable insights. Large organizations now operate banking-like structures encompassing front, middle, and back-office activities, as well as compliance and risk management. Google buys and sells securities worth almost $100 billion annually, exceeding its revenue from core business activities.

Fact 4: Google makes substantial investments in Property, Plant, and Equipment (PPE)

In recent years, Google’s spending on Property, Plant, and Equipment (PPE) has witnessed a dramatic increase. The treasury team directed over $10 billion toward such investments in 2014. Google has intensified its investment in data centers and other cloud-related

fixed assets as it competes fiercely with companies like Microsoft, Amazon, and Salesforce in a nascent market. This trend is expected to continue in the future. Google’s Q4 2014 earnings release stated, “we expect to continue to make significant capital expenditures.”

Fact 5: Despite holding significant cash reserves, Google carries some debt

Although it may appear unusual for a company with such substantial cash reserves to have any debt on its balance sheet, the international nature of Google’s business has led to a large portion of its cash being held overseas. Consequently, the head office treasury team cannot access it due to tax implications associated with repatriation. Presently, total debt levels are minimal, approximately 5% of equity.

This high-level examination of Google’s financial statements offers valuable insights into the scale of the company’s treasury operations. From a treasury activity perspective, Google now rivals mid-scale financial institutions. Perhaps the most impressive aspect of Google’s treasury story lies in its rapid growth since the IPO and the positive challenges it has faced. Google stands as a truly world-class organization, undoubtedly supported by an exceptional treasury team.

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