Google’s Q4 profit comes up short and the stock takes a hit

Posted by at 22 February, at 15 : 20 PM Print

 

When Google-parent Company did not meet the set target for Wall Street earnings, Alphabet’s stock also went down in Thursday, during after-hours trading. The value for Alphabet stock was $814.80 after the stock went down by around 2 percent on Thursday.

The revenue from video ads and mobile search for Google went up in the quarter four of 2016. However, Google’s increasing spending in new business avenues and hardware, and high tax rate affected Google’s income significantly.

Here are some figures related to Google in the Quarter Four:

  • Google collected total revenue of $26.06 billion, which has increased by 22 percent every year; the collected revenue is also more than $25.2 billion as projected by the analysts
  • As projected by the analysts, EPS (adjusted) stood at $9.36 versus $9.67
  • Cost of revenues for Google stood at $10.66 billion, which was higher than $8.188 billion revenue cost during the same quarter in the previous year.
  • Paid clicks on Google properties has been going up by 43 percent every year
  • Paid click on Google Network Members’ properties has been going up by 7 percent every year
  • Cost-per-click on Google properties has been going down by 16 percent every year
  • Cost-per-click on Google Network Members’ properties has been going down by 9 percent per year
  • Other Bets revenues, interestingly, went up significantly high from $150 million to$262 during the same quarter in the previous year
  • Other Bets operating loss was $1.088 billion, which was lesser than $1.21 billion during the same quarter in the previous year
  • Other revenues have been increasing by 62 percent every year. The “other revenues” come from Google’s new products like the Google Home voice-controlled speaker, Google Pixel phone, and Daydream View virtual reality headset.

Apart from the actual figures, investors were also concentrating on Other Bets companies of Alphabet. Other Bets companies are a group of “moonshot” companies engaged on various businesses from biotech to self-driving cars. During the half of the previous year, numerous top executives and leaders left the jobs at Alphabet and many projects were also halted. The steps were taken to cut investment on Other Bets because Other Bets have not generated any good income for Alphabet.

While giving her opening statement in Alphabet’s revenue call, Ruth Porat, the company’s CFO did not elaborated on Other Bets, however, she stated that she will carry her duty to oversee investments in Other Bets projects.

This week, Verily, one of the Other Bets projects, got some optimistic interests. Verily develops smart health care technology and one product is smart contact lens. Alphabet announced on Thursday morning that Verily has received an investment of $800 million from a Singaporean investment company.

During the Alphabet’s revenue call, Sundar Pichai, Google’s CEO, talked elaborately about Google’s new investment avenues such as new features of video sharing site YouTube, cloud services and hardware. Even though the CEO mentioned new investment areas, he did not provide any figures related to the paid YouTube services like YouTube Music or YouTube Red. “It is too early to talk about these premium services,” she said.

Interestingly, Pichai talked about Google’s other services and products, including voice search service that built into the Home speaker. “Voice is one of the tools to interactwith Google,” said Pichai as he downplayed its importance. There is a burgeoning concern related to the growth of voice search. Even though when users use voice search Google will not be able to use advertisements like in desktop or mobile search, Pichai does not see this as a challenge but as an opportunity.

 

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