Alphabet Shares Hit All-Time High After Earnings

Credit Krisztian Bocsi  Bloomberg

Credit Krisztian Bocsi Bloomberg

That compares to per-share earnings a year earlier of $8.90, which excluded a $2.7 billion charge for an earlier European fine.

Pichai was also circumspect about the company's cloud business, so as not to spoil expected announcements at Google Cloud Next '18, a conference focused on the Google Cloud Platform that opens in San Francisco on Tuesday.

"We look forward to finding a solution that preserves the enormous benefits of Android to users", Pichai told analysts after the earnings release.

On the face of it, the European Commission's massive fine hasn't really hurt Alphabet - at least not in the eyes of investors.

The reason for the surge was better than expected profits in Google's ad business, which continues to dominate.

Google parent Alphabet spent a whopping $5.5 billion on capital expenditures in the most recent quarter, almost doubling that output from a year ago as the company continues to expand its cloud business.

"We delivered another quarter of very strong performance", chief financial officer Ruth Porat said. Analysts were expecting US$25.55 billion, according to data compiled by Bloomberg. The company is selling more ads as its YouTube video service and Google search grow globally, he said.

Macquarie Group senior analyst Benjamin Schachter wrote in a report this month that "we are approaching a point where we (and we believe The Street collectively) are not understanding the size of search vs YouTube vs programmatic, which may lead to increasing volatility" in share price. That leaves the infamously opaque "other revenues" segment - including the hardware business, Play Store, etc. - to bring in $4.4 billion in revenue.

While second-quarter sales jumped, so did costs for the technology giant. The ruling dwarfs the previous record for European Union fines, last year's $2.7 billion in penalties for shopping comparisons in search results, levied against-you guessed it, Google.

Areas such as cloud computing and "other bets" have also added to Google's spending.

The quarterly growth rate of what the company pays ad partners, called traffic acquisition costs, fell for the first time in three years, which Atlantic Equities analyst James Cordwell described as the "most impressive" piece of the results.

So far in 2018, the Nasdaq has climbed more than 13 percent, more than twice the year-to-date percentage gain of the S&P 500.

Pichai mentioned new cloud customers including Domino's Pizza Inc., SoundCloud Ltd. and PricewaterhouseCoopers LLP, during the call with analysts. "Other bets", such as Waymo and Fiber, saw revenue rise 49% but only totaled $145 million in the quarter.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.