Google Inc (GOOGL)’s SpaceX Investment Is For Their Core Business: Brian Womack

Google Inc (NASDAQ:GOOGL)’s rumored plan to invest $1 billion in Elon Musk’s Space Exploration Technologies Corp. (SpaceX) is really about strengthening the internet giant’s core business, Brian Womack said in a talk with Cory Johnson and Tim Farrar on Bloomberg West.

According to the Bloomberg reporter, Google Inc (NASDAQ:GOOGL) is just one of the companies trying to get access to the internet to be more widespread in the world.

Of note is QUALCOMM, Inc. (NASDAQ:QCOM) and Virgin Galactic, LLC which recently invested in a company called OneWeb, a company that’s interested in getting a network of low-flying satellites around the world to make an internet service provider (ISP) that reaches even areas that are unreachable by traditional wireline and wireless ISPs.

“It’s interesting. We have this kind of ground war – air war, I guess in this case – trying to get more internet access all over the world. And bottom line, Google wants more people on the Internet no matter who they are, no matter where they are,” said Womack.

According to TMF Associates President Tim Farrar, the time may be right for satellite-based ISPs. In his experience, when they were trying to grow phone companies based off of satellites, the cost was prohibitive. Now, the technology may not be too expensive for the idea to take off.

Womack said that it looks like Elon Musk has some interesting things going on and Google Inc (NASDAQ:GOOGL) may have found it sensible to team up with SpaceX.

Furthermore, the Bloomberg reporter said that the rumored $1 billion Google Inc (NASDAQ:GOOGL) investment in SpaceX which values the space company at about $10 billion hints at more commitment from the Internet giant than say their moonshot projects through Google X.

$1 billion, he said, even with the company’s $60 billion cash on hand, is a pretty big investment. However, he also noted that if it works, it will be great for the company, but if it doesn’t, it can just walk away and move on.

David Tepper’s Appaloosa Management LP owned 442,259 Google Inc (NASDAQ:GOOGL) Class A shares by the end of September.