Google parent beats Q4 estimates, stock still drops

The Google name is displayed outside the company's office in London Britain. Toby Melville Reuters  File

Alphabet's Q4 earnings were $12.77, exceeding the $10.82 expected from financial experts.

Still, profits at the Mountain View, California-based company were $8.9 billion in the three months through September, or $12.77 per share, higher than analysts expected.

Alphabet shares were down 3.3 percent to $1,103.50 in after-market trades that followed release of the earnings figures from the final three months of previous year. Google is facing new pressure in digital advertising from Amazon and other players and has dropped its price per click - the amount it charges advertisers - to stay competitive. Cloud bets are likely to start paying off in the coming years, said Wedbush Securities analyst Daniel Ives.

Alphabet's revenues for the quarter were 22% higher than the same period past year and the company made a profit of $8.9bn, the company announced on Monday. That figure barely beat the estimate of $6.43 billion.

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. Baird analyst Colin Sebastian, quoted by CNBC, said he expects a "meaningful acquisition" to "enhance enterprise sales/support functions and SaaS capabilities", given that Alphabet's $109 billion cash hoard allows Google Cloud to "go elephant hunting". Fourth-quarter earnings also benefited from a $1.3-billion unrealized gain related to a nonmarketable debt, Alphabet said. Capital expenditure also grew 64 percent to $7 billion as Google expands its cloud operations and purchases new real estate for data centers.

Alphabet's report follows a big earnings week from industry heavyweights such as Apple Inc. The stock has fallen in United States after hours trading after revealing that it spent more than expected on its hardware division of Pixel smartphones and cloud technology. The company's higher-growth businesses, which also include YouTube, are less profitable than the original Google desktop search service.

Ruth Porat, CFO of Alphabet and Google did not provide any guidance for 2019 and simply said that the company will “continue to make focused investments in the talent and infrastructure needed to bring exceptional products and experiences to users, advertisers, and partners around the globe.”. He declined to name a specific number, but noted that Google's cloud business became a "multibillion dollar business" under Greene's leadership; "that was not the case five years ago", he said.

But the latest set of tech results have cheered investors.



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