Amazon spent 16 to 17 billion, but what does R&D spending vs. profit, revenue and market capitalization ratios tell us?
Just saw this post by Rani Molla, a data editor on the recode team, on R&D spending by technology companies.
Amazon, Google (Alphabet/XXVI), Intel, Microsoft, Apple, Oracle, Cisco, Facebook, IBM, Qualcomm, are leading the research and development spending. She points out Amazon is outspending other tech giants at $16.1 billion per year.
Amazon’s profit to revenue ratio is 35.1%. Facebook has the highest profit to revenue ratio of 86.3%. I wondered how the R&D spending compares with the market capitalization, revenue, and profit.
I’ll let the chart speak for itself but here is how Amazon compares with the other nine companies that are spending billions on R&D. Note, Amazon’s $16.1 Billion (or $17.4 billion) number includes content.
- Amazon’s R&D spending to market capitalization ratio is 3.43%, with Intel at 7.7% and Facebook and Apple at 1.2% each.
- Amazon’s R&D spending to revenue ratio is 11.84%, compared to 21.9% for Qualcomm and 4.7% for Apple.
- Amazon’s R&D spending to profit ratio is 33.7% compared to 37.3% or Qualcomm and 11.9% of Apple.
Facebook and Oracle have profit to revenue ratios higher than 80%.
Apple’s ratios are strikingly low:
- Profit to Revenue ratio is 39.08%
- R&D spending to Market Capitalization ratio is 1.19%
- R&D spending to Revenue ratio is 4.66%
- R&D spending to Profit ratio is 11.92%
Facebook and Apple can turn the knob on technology, content, research and development spending and outdo other technology companies.
Apple’s spending ratios are low and the company is starting to spend on Artificial Intelligence, and improving SIRI. Facebook and Apple can turn the knob on technology, content, research and development spending and outdo other technology companies, based on the ratio of their spending versus market capitalization.