Alphabet beats Wall Street estimates, but spending worries investors

Alphabet beats Wall Street estimates, but spending worries investors

Alphabet beats Wall Street estimates, but spending worries investors

The report offered no detailed breakdown of Alphabet income but Google took in the overwhelming majority of revenue in the quarter, $39.1 billion, with $32.6 billion from advertising. Revenue of $6.5 billion in the quarter represented a 31 percent increase year-over-year.

Wall Street greeted the news Alphabet, parent company of Google Inc, which posted an $8.94 billion profit in the 4th quarter of 2018, with a 3.69 percent pummeling of its stock price during extended trading.

Revenue jumped 21.5 per cent to US$39.28 billion.

"It's like they've got the goose that lays the golden eggs and their job is to spend the money", he added, noting Google's dominance of the digital ad market. Earnings per share (EPS) came in at $12.77, showing stronger profits than most analysts predicted and proving that despite the stock price fall, it's not all bad news.

Google network revenues - display ad cash from non-Google sites - were $5.6bn were up 12 per cent from $5bn last year's quarter. For the latter, much of the cost jump over the year was from fiber cable rollouts - Google has an very bad lot of private fiber - while the ad giant also invested in, among other things, data centers and the hiring of more sales and research workers. That means Google places many more commercial messages in more places, people are surfing Google hangouts more, and the ads are generating results for the companies that buy them. Microsoft reported 76 percent growth for its Azure infrastructure-as-a-service business and 20 percent growth for its overall cloud business that also includes applications such as Dynamics 365 and Office 365. Among the more damaging of those was its work on a China-specific search engine which ultimately caused questions to be raised by the USA government.

On Monday Apple briefly became the world's most valuable company once again as investors continued to absorb its better than expected results from last week.

Alphabet reported that Google's capital expenditures more than doubled. Alphabet did not separately disclose how much its Cloud business contributed to this quarter's revenue.

Google's cloud unit is laboring through a management transition as well.

Yet, the biggest issue for Google right now might not be regulatory risks so much as its own ongoing effort to diversify its revenue streams amid competition from other large technology companies. However, those operations showed a $1.3 billion operating loss.

How well Google fares with investors will depend on how aggressively the tech giant tackles cloud computing services in the next year, either organically or through acquisitions. Those brought in $6.49 billion during this quarter, a 31 percent increase year-over-year.

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