How Many Ways Can Google Spend $4 Billion?

I see two potential explanations for Google's big money raise here as the most likely scenarios.

The company's quietly been raising its capital expenditure budget since it came public, currently budgeting about $700 million for capex in 2005. Om Malik recently postulated in Business 2.0 that Google might create a nationwide WiFi Internet network for consumers. Any such strategy would require a major boost to capex, and maybe Google's stocking the coffers in preparation for that next big spending push.

Or, it's possible that Google's just being rationally conservative here by taking advantage of their huge market cap and huge multiple to build up a cushion of security. Cramer often writes, "sell when you can, not when you have to", and Google could very well be doing just that, taking advantage of the opportunity to build up its nest egg while the valuation is skyhigh. Even great companies stocks collapse sometimes, and neither Google nor anybody else knows for certain whether Google will stumble and see its stock crash at some point. Though I doubt such a collapse (and I'm sure management doubts it too), building up a cushion while the stock's so hot, is certainly not a bad idea.

Most likely though, I think Google's got some big capex plans that are likely to take the company into entirely new businesses, perhaps including wireless Internet access, video storage and blogging support, new video services.

I've been mostly hedged in my Google long position since the stock got up to around $300 or so. I'm covering my short common and opening back up my calls as I think any big announcements of new directions for this company are more likely to juice this stock than to crush it.

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