Google parent Alphabet's shares drop as earnings miss expectations

Alphabet revenue in the fourth quarter topped $26 billion up 22 percent from the same period a year earlier

In line with our assessment in the pre-earnings note, much of the growth was driven by mobile search and YouTube.

If you feel that Google claims all the eggs in the Alphabet basket, that is still true as the search division generated the bulk of the company's $26.06 billion revenue for the fourth quarter of 2016.

On Thursday, Google parent Alphabet Inc. posted fourth-quarter profit below analysts' estimates. "We see tremendous potential ahead for these businesses, as well as in the continued development of non-advertising revenue streams for YouTube", Porat said on a call with investors.

The increase in search engine ad revenue also highlights the payoff from Google's 2006 acquisition of YouTube for $1.65 billion.

The "other bets" portion of its business includes ambitious projects like self-driving cars, life sciences research and high-speed Internet access. While the majority of the balance sheet was expectedly occupied by Google, some of Alphabet's other companies also managed to make a good showing of themselves.

Google's "Other" revenue - its non-advertising business, which includes its "G Suite" business software and nascent hardware business - reached $3.4 billion, a 62 percent increase from previous year.


Alphabet announced its fourth-quarter earnings today.

Alphabet has just published Q4 2016 earnings of $26 billion, up 22% from the same quarter past year.

The technology giant saw overall revenue increase by 22% to 26.1 billion U.S. dollars (£20.7bn) on the same period a year ago, while net income was also up to more than 5.3 billion dollars (£4.2bn). CFO Ruth Porat said Alphabet would "continue to calibrate the magnitude and pace" of its investments in other bets, and "exercise careful stewardship over the amounts and pace of investments". It's likely that a small miss in earnings-per-share ($9.36, excluding some expenses, versus $9.61 expected) caused some of the market's consternation, as did the fact that Alphabet doesn't seem to be reeling in those "Other Bets" losses.

Indeed, Alaphabet's somewhat nebulous assortment of "Other Bets", such as new Pixel phones and Google Glass, finally seems to be taking of, albeit at a snail's pace. According to data from Alphabet, this particular category of projects made $260 million in sales during the last three months of 2016.

To Google's credit, however, recent declines in aggregate cost-per-click have largely stemmed from rapid growth of YouTube TrueView ad impressions. The update significantly expanded the reach of Google's Customer Match targeting, as PLAs account for almost one-third of all retailers' Google paid search clicks.

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