Tuesday, January 15, 2013

FB vs. GOOG operating cash flow

Facebook announced that it will be encroaching into Google's territory with improved search functionality.  Even though the companies' market caps imply that they are close enough in size for it to be a fair fight, GOOG has a major advantage over FB in that the cash flow generated by its business is about 10x the size of FB's.  Of course it's not impossible for David to fell Goliath, but the odds are not stacked in FB's favor.

UPDATE: This probably helps explain why FB felt it would be wise to partner with MSFT which does $31B in annual cash flow (and a toehold in search) but has also had a difficult time with execution for the better part of a decade.

If this were two countries going to war here's some similar match ups based on relative GDPs:

US vs. Spain
China vs. Turkey
UK vs. Singapore
Canada vs. Kazakhstan

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