Google parent Alphabet boosts revenue 21%

Daniel Fowler
February 5, 2019

Alphabet Inc. (NASDAQ: GOOGL) is set to report fourth-quarter and full-year results after the closing bell Monday.

Alphabet shares have climbed 9 percent since the beginning of the year, while the Standard & Poor's 500 index has risen roughly 9 percent.

Google Cloud is a "fast-growing multi-billion dollar business that supports major Global 5000 companies in every important vertical", Pichai said.

Alphabet reported a profit of $8.9 billion in the fourth quarter on revenue that was up 22 percent to $39.3 billion from the same period a year earlier.

The company also spent heavily on YouTube, which shares a lot of its ad revenue with content creators and larger media partners.

Heavy advertising in the run-up to the holiday shopping season boosted sales.

"The company's highest-growth areas (mobile search, programmatic, YouTube, hardware, and cloud) have lower margin profiles than the traditional desktop search business, so we see continued margin degradation for the company as a whole", wrote BMO Capital Markets analyst Daniel Salmon in a recent note.

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Analysts on average had expected revenue of US$38.93 billion and earnings of US$10.87 per share, according to IBES data from Refinitiv. Alphabet reported an operating profit margin of 21%, versus expectations of 22.1%. "But a lot of the additional expenditure is going into cloud where it is unclear whether there will ever be a return on that investment".

Google is being heavily challenged in digital advertising by Amazon's increasingly formidable presence.

That said, Alphabet is a very different company than Microsoft, and not just because the latter firm would never allow a top-level executive to celebrate advertisers in the one published quote it provided with its earnings.

FILE PHOTO - The Google name is displayed outside the company's office in London, Britain November 1, 2018. The results have been mostly positive so far, helping extend a winning streak for tech stocks to a sixth week. But Alphabet gave away little new information on its other ventures on Monday.

Waymo is cautiously expanding a self-driving auto ride service in the Phoenix area with an eye toward eventually spreading to other cities and even branching out into autonomous deliveries, according to Porat. For the same quarter in 2017, Alphabet had booked a net loss of $3 billion due to changes in taxation following Trump's tax cuts.

Greene and incoming leader Thomas Kurian are planning Google Cloud's 2019 strategy together, Pichai said, and the company plans to increase hiring in sales and marketing in hopes of adding more multiyear big-company cloud deals. A big chunk of that was the HTC phone team it acquired a year ago to design and build its own handsets.

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