Alphabet Inc., Google’s parent company following the restructuring a few years back, has reported earnings of $26 billion for the last quarter of 2016, climbing 22% from the same period of the previous year. The Street had been looking for adjusted earnings of $9.64 per share on $20.6 billion in revenue.
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Alphabet delivered $5.33bn in net income, amounting to $7.56 per share for Class A and B common stock and Class C capital stock, up from $7.06 a year earlier. Alphabet’s losses – yes, the revenue is paltry in comparison to the losses -stood at somewhere around $1.1 billion in the fourth quarter this year, as compared to $1.2 Billion in the fourth quarter of last year.
The vast majority of the quarter’s revenue, $22.4 billion, came from Google’s advertising business, with $3.4 billion coming from other business segments such as hardware sales, the Google Play Store and Google’s Cloud services. “We’re thoughtfully pursuing big bets and building exciting new technologies, in Google and our Other Bets, that position us well for long term growth”, said Ruth Porat, CFO of Alphabet. Google’s search business is still the main money-maker for Alphabet, dwarfing all other initiatives, including hardware.
The company’s shares fell slightly in closed-market trading after it published fourth-quarter results as investors balked at an increase in spending.
The news sent Alphabet shares 3% lower during after-hours trading in NY. Analysts are now concerned for Google’s future, as they found a potential problem for the search giant: voice. Google includes search, advertising, YouTube, Android, Chrome, and most of the other consumer-facing products that you use.
During the call, Google CEO Sundar Pichai touched a lot on Google’s main new areas of investment like hardware, cloud services, and YouTube.
Alphabet Inc.is a holding company.
In the Other Bets category, which houses Nest and Fiber, Alphabet’s healthcare-driven initiatives and other speculative projects or ‘moonshots, ‘ Alphabet posted revenue of $262 million over the quarter, with operating losses reaching $1.1 billion.
Unfortunately, Alphabet’s official statement did not include the performance breakdown of the Other Bets so there is no information about which unit will need to go.
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Currently, GOOGL has a Zacks Rank #2 (Buy), but it is subject to change following the release of the company’s latest earnings report.
