Alphabet logs $39.3 bn in revenue on Google ad business

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

In nearly as much of an anticlimax as the Snoozer Bowl, Alphabet Inc. today again beat most expectations for its fourth quarter thanks to continued strength in its search and video advertising and investment gains.

Alphabet's "other bets", the other companies owned by Google's parent, earned $6.49 billion. It reported $39.3 billion in revenues for the fourth quarter, up 22 percent from the previous year, beating expectations of $38.9 billion.

"With great opportunities ahead, we continue to make focused investments in the talent and infrastructure needed to bring exceptional products and experiences to our users, advertisers and partners around the globe", said Alphabet chief financial officer Ruth Porat. The company's operating margin, a closely watched measure of profitability, was 21 percent, down from 24 percent.

The category Google calls "Other Revenues", which includes cloud, the Google Play store, and consumer hardware, saw $6.48 billion revenue in the fourth quarter, up from $4.96 billion year-over-year.

But Alphabet also spent more on research and development and other expenses during the quarter, as it works to expand its cloud computing business and its long-term bets such as self-driving cars. Alphabet had 98,771 employees at the end of 2018, up 23 percent from a year earlier. Other bets lost $1.3 billion, up a whopping 78 percent over the 748 million the group lost a year ago.

On a per-share basis, the Mountain View, California-based company said it had profit of $12.77.

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Advertising revenues were up 20% from last year's fourth quarter, to $32.6bn, the same rate of growth as last quarter.

As a result, shares fell more than 3 percent in after-hours trading. Baird analyst Colin Sebastian, quoted by CNBC, said he expects a "meaningful acquisition" to "enhance enterprise sales/support functions and SaaS capabilities", given that Alphabet's $109 billion cash hoard allows Google Cloud to "go elephant hunting".

Alphabet's stock closed at $1,141.42 Dollars at the end of the day's trading.

Alphabet is the latest of the big tech firms to report earnings for the final three months of the year. Operating losses were $1.33 billion.

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. New privacy rules in Europe may have limited this data harvesting slightly, but that's hit smaller competitors more than the two digital giants.

"I think Microsoft and Amazon need to keep one eye open with Google", he said.

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