Google’s parent company Alphabet has reported lower than expected profits in the last three months of 2017 after higher costs offset an increase in advertising sales.
Revenue for the three months ending December 31 was $32.3 billion (£22.6bn), a rise of 24% on the same period in 2016.
Overall, Alphabet reported a loss of $3 billion (£2.1bn) for the fourth quarter as it set aside $11 billion for taxes – an estimated $9.9 billion (£6.9bn) was for taxes on repatriated earnings.
Excluding the tax provision, Alphabet would have posted a profit of $6.8 billion (£4.7bn), falling short of the $7 billion analysts had predicted.
The tech giant’s shares slid 2.3 per cent in after-hours trade on the results, highlighting concerns about the rising costs of projects such as the Waymo’s self-driving car service, and the fact that profits were weaker than expected.
The company also used its earning report to confirm that current board member John Hennessy has been named Alphabet chairman following the departure of Eric Schmidt in December.
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The vast majority of Alphabet’s revenue continues to come from Google and its various business, most notably its advertising network, but the company’s so-called ‘other bets’ saw revenues rise from $262 million (£183m) last year to $409 million (£286m) in the last quarter
The vast majority of Alphabet’s revenue continues to come from Google and its various business, most notably its advertising network, but the company’s so-called ‘other bets’ saw revenues rise from $262 million (£183m) last year to $409 million (£286m) in the last quarter.
The Google segment accounted for $31.9 billion (£22.4bn) in revenue and delivered an operating profit of $8.8 billion (£6.2bn).
‘Overall, we are interpreting the quarter’s results favorably if only because they were ahead of our conservative expectations,’ Pivotal Research group senior research analyst Brian Wieser said in a note to investors.
‘Alphabet reported good 4Q17 results which were generally consistent with our long-term views on the company.’
The ‘Other Bets’ segment of Alphabet includes the self-driving car firm Waymo and smart thermostat company Nest.
Alphabet chief financial officer Ruth Porat said: ‘Our business is driving great growth, with 2017 revenues of $110.9 billion (£77.9bn), up 23% year on year, and fourth quarter revenues of $32.3 billion (£22.7bn), up 24% year on year.
‘Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses.’
Porat said Alphabet was pleased with the progress of its Other Bets, which include the life sciences unit Verily and a new cybersecurity division called Chronicle.
The units, born of an X lab devoted to ‘moonshots,’ delivered revenue of $409 million, up from $262 million a year earlier. The loss from those projects narrowed to $916 million from $1.1 billion.
The company also used its earning report to confirm that current board member John Hennessy has been named Alphabet chairman following the departure of Eric Schmidt (pictured on January 12, 2017 at Trump Tower where, at the time, U.S. President-elect Donald Trump’s offices were)
Alongside the new results, Alphabet’s Google announced last week that it will open a new support centre for Europe, the Middle East and Africa in Portugal this year.
Portugal’s Prime Minister Antonio Costa made the announcement from Davos, Switzerland, and said the decision would lead to the creation of 500 tech jobs for highly-skilled Portuguese workers.
Prime Minister Costa also said that the announcement was an acknowledgement of the country’s growing education standards and technological prowess.
‘We have invested strongly in education, we are highly language-proficient’ and have a large pool of skilled engineers, Costa said in a slightly broken English, adding that he was an exception to the rule, according to Reuters.
HOW HAVE ALPHABET’S FORTUNES CHANGED OVER THE YEARS?
Alphabet, Google’s parent company, is an American multinational conglomerate company headquartered in Mountain View, California.
The company, incorporated on July 23, 2015, is a holding company.
The company’s segments include Google Inc. and its ‘Other Bets’, including Access, Calico, CapitalC, GV, Nest, Verily – a life sciences research organisation, self-driving car-hailing service Waymo, Nest products and services (a smart thermostat firm) and X, a ‘moonshot’ company aimed at launching technologies to ‘make the world a radically better place.’
On July 8, 2015, Google’s stock prices were priced at $541.7.
But in the lead up to the formation of Alphabet, stock prices surged to $699.62 on July 17, 2015 – an increase of 28.45%.
From July 9, 2015 to January 30, 2018, Alphabet’s stock prices rose by 116%.
Alphabet’s current stock price is $1,181.59, although the tech giant’s shares slid 2.3% in after-hours trade on February 1, 2018 following Alphabet’s reported loss of $3 billion (£2.1bn) for the fourth quarter of 2017, as it set aside $11 billion for taxes – an estimated $9.9 billion (£6.9bn) was for taxes on repatriated earnings.
The vast majority of Alphabet’s revenue continues to come from Google and its various business, most notably its advertising network – revenue from Google’s ad business grew by 21 per cent from last year and accounts for 84 per cent of Alphabet’s total revenue.
However, the company’s so-called Other Bets saw revenues rise from $262 million (£183m) last year to $409 million (£286m) in the last quarter.
Although a Google spokesperson would not divulge how much the company is planning to invest in the new Lisbon centre, which will be dedicated to third party suppliers who support Google’s operations.
The centre will open in the town of Oeiras on the outskirts of Lisbon, where mulitiple tech companies have their local offices.
The economy ministry said that talks about the new office has begun during the annual Web Summit in November, hosted by Lisbon for the second year in a row.
The Web Summit has grown into one of the world’s largest technology conferences, from 400 participants when it started in Dublin in 2010, to 59,000 participants in November.