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Home / Business / Alphabet stocks fall after Google beat revenue, but sales are tight

Alphabet stocks fall after Google beat revenue, but sales are tight



Alphabet Inc.'s stock fell 4% yesterday, after reporting better-than-expected earnings that slightly exceeded Wall Street expectations but missed sales projections.

Profit for the third quarter reached $ 9.19 billion, or $ 13.06 per share, much higher than the analyst's average analyst estimate of $ 10.42 per share, FactSet said. Similar to the last few quarters, a significant chunk of alphabet

[GOOG GOOGL + 4.40%

GOOG + 4.27%

Gains were associated with its investments: the company said it was $ 1

due to gains in equity securities, 38 billion contributed to the profit. A change in accounting standards earlier this year triggered this type of disclosure.

Several years ago, investors viewed Alphabet's investments in various portfolio companies as a waste of money and time, says founder and managing partner Trip Miller of Gullane Capital Partners, which holds a position in Alphabet.

"People complained [Alphabet] had burned a lot of money and there was resistance," he said in a telephone interview late Thursday. "We look at the liquidity and investment portfolio, and we believe there is a private equity-like portfolio that has the option to generate cash flows or one-time returns, which we see as a hidden asset that is now much more valuable . "

Overall, Alphabet posted sales of $ 33.74 billion, compared to $ 27.77 billion a year ago. "Our business continues to enjoy strong momentum worldwide, led by mobile search and our many products that help billions of people every day," said Ruth Porat, chief financial officer of Alphabet, in a statement with the results release.

Google produces the vast majority of Alphabet's sales, with most of the huge sums of money coming from Google's advertising products. Taken together, Alphabet's Google unit reported sales of $ 27.01 billion, compared to $ 21.97 billion a year ago, after eyeballs from traffic acquisition costs or other companies' TACs Google sites to send and his network. According to FactSet, analysts expected $ 27.3 billion in Ex-TAC ​​sales

The Google properties were sold in $ 24.05 billion, while the network of non-Google sites that ads US $ 4.9 billion in revenues.

AMZN, + 7.09%

which also reported gains on Thursday after the closing bell, could freeze in some of Google's market share for ads. "We see a greater than expected slowdown in Google Properties' revenue, which is its core business," eMarketer analyst Monica Peart wrote in an email. "This is likely to be related to the increase in competition from Amazon, as consumers are increasingly turning to the e-commerce giant for their product searches."

It also discloses what revenue comes from Google's websites, such as Google Search and Gmail. and his network, the company stops breaking information. For example, analysts say that YouTube is a multi-billion dollar business, but the company does not indicate its actual size.

"Net-Net sees positive progress in meeting Wall Street expectations or not," Miller said. "There has been a lot of excellence in this market. [Alphabet] is a growing business, regardless of what the economy or the markets are doing in the short run."

Google's ad units pull the lion's share of the money however, Google operates several non-commercial companies under Google Other Segment, which includes its cloud computing platform, hardware sales such as the Pixel phones and Google Home speakers, as well as the revenue from its Play Store. Together, these companies generated $ 4.64 billion in revenue, compared to $ 3.59 billion a year ago. According to FactSet, analysts expected on average that these companies would generate $ 4.81 billion in revenue.

Alphabet said earlier this year that its cloud unit posted sales of $ 1 billion a quarter – Miller says it's a beautiful "milestone." It means a lot to his team – and has not updated since. Porat said that significant parts of the investments were made to support the company's cloud offerings, with machines being the biggest component. She also said that the construction of data centers is an increasing percentage of capital investment and that the company is developing 20 data centers around the world. Alphabet reported capital expenditures of $ 5.28 billion compared to $ 3.54 billion a year ago.

Alphabet's Other Bets, which are outside Google but within Alphabet's corporate structure, reported losses of $ 727 million from $ 650 million in the year-ago quarter. Other Bets sales increased from $ 117 million to $ 146 million.

The Alphabet stock gained 4.8% and the S & P 500 last year

SPX, + 1.86%

Index has fallen 0.7%.


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