"Recliner" wrote in message
...
On Mon, 19 Sep 2016 12:19:15 +0100, "tim..."
wrote:


"Recliner" wrote in message
...
Robin9 wrote:

tim...;158053 Wrote:
came into my in box via my linkedin account

https://www.linkedin.com/pulse/uber-...jared-carmel-2

posted without comment (for now)

tim



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Interesting. What surprises me is that Uber is deemed to be
losing money hand over fist. Not making enough profit to
provide investers with a satisfactory return is one thing.
Actually making a substantial loss is another. As Uber's
drivers are paid only a percentage of what customers are
charged, in London at least the business must show a profit
before overheads are included. Are Uber's overheads far
too high?

Uber's overheads are famously low. Why do you think Uber is making a
profit
in London? It doesn't even make a profit in the US.

Uber makes no attempt to make a profit. It is pouring investment funds
into
growth, with the aim of a mega IPO.

"Uber's losses and revenue have generally grown in lockstep as the
company's global ambitions have expanded. Uber has lost money quarter
after
quarter. In 2015, Uber lost at least $2 billion before interest, taxes,
depreciation and amortization. Uber, which is seven years old, has lost
at
least $4 billion in the history of the company."

"Subsidies for Uber's drivers are responsible for the majority of the
company's losses globally"

And now on earth do Uber spend so much on subsidising drivers?

The drivers pay all of the costs of running the car and Uber pay them a
percentage of the fare to cover those costs and provide an income for the
driver (some argue, a pittance of an income). All Uber pay for is the
advertising and the Hailing/tracking "technology".

Read what I quoted:
"Subsidies for Uber's drivers are responsible for the majority of the
company's losses globally"

I read that bit - I saw it in the article as well

I am questioning what these subsidies actually are.

It is, of course, the sunk costs of investing in new technology that
causes
starts ups to report losses in the initial years of operation that need to
be recouped later. But much of it is a one off cost that doesn't re-occur
year after year, and in any case Uber's technology is pretty simple.
Apart
from having to add servers to their cluster (whatever the technical term
really is) as demand grows, what additional technology costs do they have
in
year 2, 3 4 ...?

Nobody said they were technology costs. As the reports say, they're
driver subsidies.

but what are they?

It's the same basic app(s) that need to be downloaded - either by users or
by drivers (OK it needs translating, but if that is costing them more than
a
couple of grand per language they have been ripped off), and the
infrastructure that it is downloaded over, and used on, is provided by
someone else (with access costs paid by the user/driver)

Unless ... Uber are somehow paying for the cars up front for drivers who
can't afford to fund them themselves?

No. But they overpay drivers in most start-up cities, or guarantee a
level of business, whether or not it's achieved.

It still seems a lot

I found an article on the roll out of Uber in London

The guy who was responsible for finding new drivers had a budget of 50K per
week to subsidise new drivers

that 2.5 million per year

that's a mile away from 2 billion

if they are paying that much to roll out in 1000 new cities a year I suggest
that their plans are overly ambitious


If there are, and this is the cause of the losses, then they are
constructing the accounting for the transaction wrongly. The value of the
cars (or the outstanding loans) should remain in the P&L as a capital item
and offset any loss in the accounts cause by spending the cash on the
cars.

All that leaves is the adverting costs as they roll out to new countries

No


but 2 billion per year on advertising - really!

No. Read the quoted report.

I did

it gave no indication as to what they were paying for.

Perhaps this is some taxation game that they are playing reporting these
losses?

No, but those losses will be carried forward to offset future profits
when they arrive.


Do you *really* think Uber's business is that simple?

Is how simple

yes I do

spending billions on trying to win a market of millions is just silly

tim