Thursday, January 16, 2014

Companies Spending Plenty on R&D and Software (excerpt)

In the GDP accounts, capital spending includes Structures (23%), Equipment (45), and Intellectual Property Products (32), where the numbers in parentheses show the percent of the current-dollar total during Q3-2013. Equipment includes information processing equipment, industrial equipment, transportation equipment, and other equipment. Intellectual Property Products includes software, research & development, and entertainment, literary, and artistic originals.

On closer inspection, what stands out is the extraordinary increases in spending on R&D and software both in current dollars and adjusted for inflation. In current dollars, the total is at a record $578 billion (saar), doubling since the end of 1998.

Spending on R&D and software combined has been running around 30% of total capital spending in recent years, doubling since the mid-1980s. The two categories currently each account for about 15% of capital spending. Thirty years ago, R&D was 11% of the total, while software was just 4%.

Today's Morning Briefing: R&D Rocks. (1) Keeping a lid on costs and boosting margins. (2) Are record profit margins bad news for the bulls? (3) Profits not as wonderful on aggregate basis. (4) An upbeat assessment of capital spending. (5) R&D and software account for a third of capital spending. (6) Smart equipment. (7) More bang per R&D buck thanks to IT. (8) The Internet of Things. (9) Rockwell’s super-smart factories. (10) Obamacare creates more problems that private sector will solve. (11) Focus on overweight-rated S&P 500 Industrials. (More for subscribers.)

No comments: