Alphabet Disappointed Investors As It Delivered a Mixed Quarter


On Friday evening, Alphabet, the parent company of Google, disappointed its investors after posting below-par earnings for the fourth-quarter of 2017.

The stock of Alphabet dipped by 2.5 percent during the after-hours trading leaving the company worth around $795bn.

Earnings per share of $9.70 missed expectations of the consensus of $9.98. However, the fourth quarter revenue amounting to $32.3bn – up by 24 percent during the same period of the past year – surpassed the market projections of $31.86bn.

Ruth Porat, the finance chief of the company, said that Alphabet was “driving great growth,” referring to the highlight operating income growth for the full-year of 10 percent.

“[This] 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,” said Porat.

The advertising metrics of the firm outstripped the expectations of Wall Street – aggregate paid clicks increased by 43 percent year-on-year, compared with the projections of 42.1 percent. However, traffic acquisition costs or the money handed over to phone manufacturers including Apple – continued to increase.

At $6.45bn, the costs represent 24 percent of the advertising revenues of Google.

Collin Colburn, a Forrester analyst, said that Google seemed to be having a hard time to compete with Amazon on retail searches and instead, was on tie-ups with retailers such as Walmart.