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Lot's of money for OVH ($327m to be exact)
http://www.ovh.com/us/news/cp1662.to-accelerate-its-international-development-ovh-raises-327-million
“The goal is to provide the means to become a key player in the global cloud, able to compete with the big American companies”, says Nicolas Boyer, CFO of OVH.
Comments
Hum, which american companies? I was wondering why they are more careful with the customers lately, they were trying to get more money.
Amazon, perhaps.
Also Softlayer, Google App Engine, Microsoft Azure, Rackspace aka the cloud big guys and all American.
Edited as forgot Rackspace
I read it as "To accelerate its international development, OVH raises $327" and though why are they making news about this low amount...
OVH needs to come to the US
$327 still a lot for me @linuxthefish
OVH's business model doesn't really collide with Rackspace, Softlayer and the main cloud providers. OVH is looking aiming at the box in a rack business, where was Rackspace/Softlayer is looking to offer box with services.
I was sure they will need this money earlier, but they straighten up their act a lot since last year around this time. This delayed the need for refinancing, but are still losing money.
Not sure that's true, not checked their yearly reports but in the press release they mention that the total investment is "more than 490 million dollars (the rest is self-funded)".
Also the press release specifically states (as in the OP) this is for funding for
“The goal is to provide the means to become a key player in the global cloud, able to compete with the big American companies”, whether that means they are going to expand their existing cloud offering, expand their Run Above offshoot, or more likely just build a few more DC's (think they mentioned Asia a while back) and are just using the cloud term as its 'sexy'.
Remember how much they raised last time and how much they expanded. They had more or less clear plans for new DCs, which conspicuously lack now, and new DCs in other countries would be the only possible justification for this amount, expanding product range would have not needed such an amount if the business is so solid. You can do a good high capacity DC with 50 mil and cash to operate the first year until gets filled.
They say in many places they invest all profit, which is looking good for investors and also allows for passing some operating costs as investment (I am sorry for being a bit too much an economist and accountant here, I cannot really explain in a few words how that is done).
Asia.
If they were losing money, they wouldn't be able to reinvest. You can't reinvest if you aren't making a profit.
Sure you can. You have a bunch of cash and still run a year to year loss.
Reinvesting is a term that specifically means putting profits back in. It is literally impossible to reinvest without a profit.
So you make a profit and in the latest year you make a loss. You can still reinvest past profits even if you're "losing money". Dunno why it takes several posts to figure that out.
No you can't, because that is not what reinvesting means.
Misunderstanding.
I meant you can have fake profit, pass operating cost as investment to keep investors happy and still pay lower taxes on the non-existent profit.
It is technically reinvesting the profit, even though there is no real profit and no real investment, just operating cost, I hope now it is more clear.
A really good accountant can do whatever is needed with the books, practically committing fraud while technically obeying the law. The accountants in all countries have some codes of best practices and they are useful as a cheatsheet when you need a quick idea on what to do to make the numbers look like your boss needs them to look like. Trust me, you don't want to know much in this area, but I will give you a simple example, hopefully clear even for people which think inflation is when the corner store rises potato prices in early spring.
2.1 The old SAN I should make a cost because was a total loss, yet i will keep it in the inventory, I have good and relatively new assets on paper.
In reality I run the business very poorly, but on paper it looks like I am expanding.
They need the money for the new data center in germany. They will expand their locations in other countries too. A data center is not cheap.
@Maounique reminds me of this:
"You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public buys your bull."
May be they will build a DC in Asia.
They kind of do that already - they offer U.S. New Jersey ip addresses through their Canadian dc.
That's nowhere near the same thing as actually hosting in the US.
I agree totally. I guess it just depends on what the end game is really, i.e. what your trying to accomplish.