San Francisco – Google parent Alphabet is now the world’s most valuable company, stealing the crown from Silicon Valley rival Apple after reporting higher profit and sales fuelled by a booming advertising business that’s supporting ambitious new projects.
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Some Apple fans have pointed out that the iPhone maker just reported more profit for the quarter, $18.4 billion, than Google reported for the entire year at $15.8 billion. This decreased the market capitalization of Alphabet to $499.94 billion, allowing Apple, with a 1.98 percent increase in the price of its shares to close at $96.35, to once again claim the top spot with market capitalization of $534.22 billion.
Nevertheless, the business’ final quarter results – the first since it restructured from Google into Alphabet – surpassed Wall Street expectations, sending shares up nearly five per cent in after hours trading, according to Reuters. However, Apple, relying its business heavily on iPhones, has been on a decline.
Alphabet is expected to gain more gradually from growth in mobile search and monetization of YouTube.
Alphabets core business looks very healthy, Josh Olson, an analyst at Edward Jones & Co., said.
Facebook itself has 1.59 billion monthly active users with 1.44 billion monthly active users on their mobile platform.
The changing of the guard underscores the rising value of reaching people on a daily basis with services to generate streams of revenue, as opposed to selling hard goods, even if it can be done masterfully, analysts say.
Walter Price, manager of Allianz Technology Trust, suggests there is much more to come, believing Alphabet is now likely to ramp up spending, particularly on Google Fiber – its broadband and cable offering – which is being rolled out in up to 20 United States cities this year.
Apple, on the other hand, has struggled due to softening demand for its signature iPhone, especially in China, and the apparent lack of another blockbuster product in its pipeline.
Revenue: $21.3 billion, a 47% increase over the $14.48 billion Google did in the fourth quarter a year earlier.
Google is also counting on advertisers to gradually pay more for marketing messages on smartphones. The company continues to focus on the iPhone and iPad tablet computers.
Altogether, this was a healthy report by Alphabet, which showed the company’s core business remains in the pink of health, while its next growth drivers such as YouTube and Google Play are doing well.
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Since last April, Amazon had signaled that it would be focusing more on showing profits and slowing, to some degree, its heady investments into new businesses.
