Alphabet delivers better-than-expected Q4 revenue

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

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

He's happy Google is spending heavily on YouTube, cloud and hardware.

In terms of Google's individual earnings, the Mountain View search giant reported a Q4 2018 revenue of $39.12 billion Dollars (roughly $51.33 billion CAD).

Analysts had expected a profit of $10.86 a share, or $11.02 adjusted for tax law changes. Alphabet doesn't break out the amount of money it makes with Pixel phones and Home smart speakers, but the company's non-advertising revenues grew from around $5 billion in Q4 of 2017 to $6.5 billion in Q4 of 2018.

Other bets revenue was $595m, up from $477, though operating loss increased from $2.7bn to $3.36bn as well.

How do Alphabet's Q4 results compare to other tech stocks?

While Alphabet relies on Google's advertising business to generate profits, YouTube and cloud computing are costlier operations than its traditional desktop businesses.

The category accounted for $154 million in revenue for the quarter, up from $131 million a year ago.

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Alphabet's fourth quarter revenue rose 22 per cent from a year ago to $39.28-billion, compared to the average expectation of $38.93-billion among analysts tracked by Refinitiv.

"Google saw a steep decline in operating margins", said Richard Kramer, analyst at Arete Research "They have plenty of cash to invest, and $7 billion in capex is a huge spend".

Google business revenue was $136.2bn, up from $110.4bn previous year.

Fourth-quarter sales, minus fees paid to partners, climbed 23 percent to $31.84 billion, the internet giant said in a statement Monday. Porat said headcount growth should moderate in 2019.

Google's cloud unit is laboring through a management transition as well.

Google CEO Sundar Pichai made sure to thank outgoing Google Cloud CEO Diane Greene for her efforts during his prepared remarks. When shoppers hunt for holiday gifts, they often use Google's search engine, letting the company send them targeted product ads based on those queries. Jefferies analyst Brent Thill said a new share buyback plan of as much as $15 billion is possible. So Google is responsible for 109 percent of Alphabet's profits and 69 percent of its revenues. It is simply getting more expensive for Google to stay Google.

The same appears true for Google parent company Alphabet Inc. Thanks chiefly to its search ads as well ads on its YouTube video service, Google has 31.3 percent of the worldwide market to Facebook's 20.5 percent, according to eMarketer. Google has seen increasing competiton from the likes of Facebook and Amazon. In particular, Amazon has been aggressively expanding its ad business, which is small but growing quickly. "But with talk of economic pressures on the horizon in the USA, noticeable sluggishness in their fourth-quarter performance could warn of more dramatic slowdowns in the digital advertising market, which had been relatively insulated while the ad giant enjoyed strong double-digit growth rates".

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