Should You Worry About This Tech Trend?

Silicon Valley's biggest names may be flush with cash, but owners -- i.e., shareholders -- aren't reaping huge dividends. Instead, Facebook (NASDAQ: FB  ) , Google (NASDAQ: GOOGL  ) , and NVIDIA (NASDAQ: NVDA  ) are joining Apple (NASDAQ: AAPL  ) in expanding their corporate digs.

Google and NVIDIA last week went public with plans to expand their existing office space. Vanity Fair published an exclusive preview of the new Googleplex, which is to be designed by architecture firm NBBJ and occupy 1.1 million square feet.

NVIDIA, meanwhile, is planning to add a new reptilian-looking HQ across the street from its current Silicon Valley digs. In a blog post, co-founder Jen-Hsun Huang described the project as embodying the company's ambitions.

"The design harmonizes smart functionality and a shape that connects with and inspires our employees – a triangle, the fundamental building block of computer graphics," Huang wrote.

Sounds awesome, right? It must be if you're an employee of either of these companies. Or, for that matter, Facebook, which months ago revealed plans to build a decked-out new space for 3,400 engineers.

Less clear is whether these efforts are necessary steps to sustained growth or a severe case of Apple envy. Steve Jobs presented plans for the Mac maker's forthcoming HQ, which looks more like a spaceship than an office complex, at a Cupertino town hall meeting months before his untimely death.

Is this a troubling trend? A little, yes, but Silicon Valley is an intellectually driven economy, and top companies win by attracting and keeping the brightest minds in their fields. Appealing space can be a recruiting tool.

But I also wouldn't mind seeing these companies use some of their cash as a substitute for dilutive options grants that eat away at profits and cost shareholders gains. Do you agree? Disagree? Please share your thoughts in the comments box below.

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  • Report this Comment On February 24, 2013, at 10:19 PM, EconoWizDanny wrote:

    I am not entirely sure what you are suggesting? I do agree a reduction in their dilutive options/shares would be a good thing considering the majority of them posting a negative market trend over the last week. But, I don't know the particulars of the options well enough to know if they are even callable? Also, I don't associate the liquidity associated with a new HQ as representing a current capital investment with enough value to really effect the total amount of callable bonds outstanding. But, I haven't looked at the numbers so you may be right.

  • Report this Comment On February 25, 2013, at 5:22 PM, XXF wrote:

    The tech industry is awash in poor governance. There are too many director's seats held by insiders and under quid pro quo arrangement and the industry is dominated by individuals with egos that outsize their morals.

    How would you define the value of a company if not the present value of future dividends discounted at a risk-based rate of return? If tech companies refuse to return any of the money to their business' owners then the value of the company is zero.

    How many more times do we need to see tech companies whittle away under executive compensation and failed business lines before investors get loud enough to demand they return our cash? Of course it's hard to get that loud when most tech companies out there have dual class shares and poison pill amendments to prevent shareholders from demanding their rights.

    *Soapbox rant over*

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