Alphabet logs $39.3 bn in revenue on Google ad business

Alphabet logs $39.3 bn in revenue on Google ad business

"All in revenue fundies [fundamentals] remain very consistent and robust", wrote RBC Capital Markets analyst Mark Mahaney, who noted that the 21% operating margin was "the lowest that we've seen in many years".

Alphabet said its Q4 results slightly surpassed analyst expectations.

Alphabet, which is valued at $790 billion, is one of the world's largest public companies, with interests spanning cloud computing, smartphones and self-driving cars.

In late 2015, Urs Hölzle, Google vice president for technical infrastructure, said Google wants its cloud business to be bigger than its ad business by 2020. The consensus analyst estimates call for $10.86 in earnings per share (EPS) and fourth-quarter revenue of $38.98 billion.

All this even as Alphabet released mostly upbeat news yesterday about its Q4 results, beating analysts' forecasts in key metrics in many instances.

Google also had to pay more to attract traffic.

Alphabet reported that Google's capital expenditures more than doubled. Only problem: Some higher expenses for spending on cloud engineers and data centers as well as YouTube content didn't thrill investors. Other bets lost $1.3 billion, up a whopping 78 percent over the 748 million the group lost a year ago.

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The Google LLC parent said its profit hit $8.9 billion, or $12.77 a share, from a $3 billion loss a year ago thanks to tax law changes.

Google faced scrutiny in late 2018 over alleged bias against conservatives on its signature search engine, as well as the decision to provide Android co-founder Andy Rubin $90 million in severance pay after he was sacked amid sexual misconduct claims - sparking a global protest among employees. The revenue mainly comes from Google Fiber, a high-speed internet service, and Verily, a life sciences division, Porat said on the call.

Concerns appear to be around how much Google is able to charge advertisers for ads.

Google revenues from its "other" category, which includes what it pulls in from cloud services and hardware, climbed more than 30 percent to $6.5 billion in the fourth quarter. Revenues from Other Bets were just $154 million, with operating loss reaching $1.328 billion.

Pichai highlighted YouTube as one of the company's success stories, saying the number of YouTube channels with more than 1 million subscribers almost doubled in 2018.

The cash hoard has also sparked speculation among some analysts that Alphabet will make a major acquisition to boost its cloud business. Among the more damaging of those was its work on a China-specific search engine which ultimately caused questions to be raised by the USA government. It's also seeing an "uptick" in $100 million contracts, Porat said.

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