Google and Apple, announced their Q4 2017 financials on February 1, 2018, and to no one’s surprise, they both posted Billions of profits and even exceeded market analysts’ predictions despite the challenges that both companies faced.
Wall Street reacted negatively to the profit miss, sending Alphabet stock down as much as 4 percent in after-hours trading.
Google’s advertising business was up from 2016’s Q4. Aggregate cost per click fell 14% compared with the year ago quarter and was down 6% sequentially.
It is reported that this expense rise was partly down to Google’s heavy promotion of its Pixel 2 smartphone and YouTube TV service. Along with hardware, this also includes sales from the Play Store and Google’s enterprise ventures.
Google may have made its name as a search engine, but cloud services are quickly growing in importance for the $817 billion company.
Google only took 26% of that $5 billion in revenue, down from a 29% cut in the prior quarter and 30% in Q4 2016.
Google Cloud is now a $1 billion-per-quarter business, CEO Sundar Pichai told investors during the company’s fourth quarter 2017 earnings call on Thursday afternoon.
“Overall, it was a good quarter”. Consensus estimates predicted higher earnings of $9.98 per share on lower revenue of $31.84 billion. The recent US tax law change set Alphabet back $9.9 billion as a one-time expense during the quarter.
FILE PHOTO: The Google logo is pictured atop an office building in Irvine, California, U.S. August 7, 2017.
Further, Alphabet’s board authorized repurchase up to an additional $8.59 billion of its Class C capital stock.
The growing use of smartphones worldwide has been a bonanza for social media company Facebook Inc and Google, which research firm EMarketer estimates together account for almost 60 percent of mobile ad sales. Though their data centers don’t generate huge numbers of jobs, tech companies typically receive local and state tax incentives in exchange for picking certain locations.
Alphabet generated $110.9bn in full-year revenue for 2017, up 23pc from 2016 and breaking the $100bn mark for the first time in the company’s history.
As TechCrunch reports, “Google’s last quarters have been marked with the creeping shadow of increasing costs for its traffic acquisition as a percentage of Google’s revenue, or TAC”.
The technology giant also confirmed current board member John Hennessy has been named Alphabet chairman following the departure of Eric Schmidt in December. Other Bets are the other companies under the Alphabet parent like Waymo (self-driving cars), Nest (smart appliances), Verily (life sciences), and more.