Alphabet Q4 Revenue Up 24%; Google Pays Out More To Partners

Alphabet Q4 Revenue Up 24%; Google Pays Out More To Partners

Among the countless disruptions ripping across information technology, cloud computing stood out last year, and with the new year underway, its impact is only accelerating. Alphabet is estimated to report its fourth quarter results after the market close. Two equities research analysts have rated the stock with a sell rating, eight have assigned a hold rating, thirty-four have assigned a buy rating and one has issued a strong buy rating to the company's stock. Microsoft Corp. also said yesterday that cloud revenues almost doubled.

Alphabet shares fell by over 5% in Thursday afterhours trading prior to steady at a loss of 2.7%.

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".

In 2016 Q4, Alphabet earned $1.35 billion from those properties, but that figure dipped to $1.32 billion in 2017 Q4.

In all Google's core business - advertising sales - exceeded $27 billion for the quarter, a good result but not without some tangential concern.

The tech-heavy week of earnings continues with Google-parent Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) scheduled to report fourth-quarter results after market close today, February 1. But Other Bets also incurred a quarterly operating loss of $916 million.

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Alphabet's fourth-quarter profit missed analysts' estimates, hobbled by rising payments to web-search partners, higher marketing expenses and troubles at YouTube that weighed on its advertising business during the holiday quarter.

Net income was US$1.9bn, more than double from the same period past year and the highest figure yet for the firm. However, Amazon benefited from a tax benefit of $789 million related to the new tax overhaul, which analysts might not have factored in.

"The company's continued strong top-line growth and myriad new opportunities to drive future growth remain the keys to the stock", MoffettNathanson analyst Michael Nathanson said in an email. Unlike Google's AdWords, which are determined by an advertiser's optimization choices, AMS' ad rankings are determined by a product's popularity and overall sales.

Teaque Lenahan, group director at Fjord, an Accenture Interactive design and innovation consultancy and one of the first consumers to shop at the Amazon Go prototype store in Seattle, said shopping at Amazon Go was "delightfully boring", but it will give the online retailer a way to learn about consumer shopping behavior in physical stores, and eventually, to integrate online data into the experience. The hardware category saw revenue of $4.69 billion, a 38% over a year ago. The segment includes businesses like self-driving unit Waymo and smart home appliance maker, Nest, among others. Alphabet would be paying a pretty high price, however, as it nears its trillion-dollar market cap and stock prices near all-time highs.

The Chocolate Factory also claimed the number of Google cloud deals that bring in more than $1m had more than tripled from 2016 to 2017, and that there are 4m paying G Suite customers.

Google's revenue minus its traffic acquisition costs - the money it has to pay other companies as referral fees to get users to its sites and products - was $25.87 billion. The company generated around $10.3 billion of cash from operations in the fourth quarter and spent $4.3 billion on capex, netting a free cash flow of $6 billion.