Among the more financially inclined google-ologists, the eternal question is: What the hell is Google spending all that cash on? It's known as the CAPEX problem. The Capital expenditures - where are they?

Henry Blodget has some data from the 10Q - apparently during the latest quarter it was about $112M on servers, $138M on buildings and land etc. It turns out not to look as bad as some had feared. I.e. It's possible that Google is spending reasonable gobs of money for a company their size.

So if Google's CAPEX is a reasonable number some things fall out:

• Their valuation in terms of free cash flow could be reasonable. That is if they reach $3.5B in FCF this year.
• Knowing how much they spend on servers per quarter could help with estimates of how big their infrastructure really is. More on that in a future post.

And to those who malign H. Blodget based on his infamous past - you really should be thankful he's "covering" Google, cause he's doing a better job at it than anyone else.

¶ 5/14/2006