Reporting of Google upsets the board of directors
Alphabet Corporation, which includes Google, spoke about its successes in the last quarter and the entire past year. Reporting from Google and the entire Alphabet demonstrates that revenues grew by 22% over the last quarter and by 23% for the full year. Net profit increased 2.5 times. However, after the publication of the financial report, the company’s shares fell by slightly more than 3%, as investors were more concerned with other characteristics – for example, traffic costs are rising, capital costs also increased, as well as losses of some divisions of the concern, including Verily, Waymo and others.
Reporting of Google and investors’ response
On February 4, 2019, the company reported that Alphabet indicators in many ways exceeded all analysts’ expectations. Thus, revenue for the quarter amounted to $ 39.3 billion, and for 2018 – almost 137 billion. Operating profit also increased in the last quarter of 2018, to $ 8.2 billion. Net profit amounted to almost 9 billion – and this despite the fact that at the end of 2017 there was a loss of $ 3 billion. Over the past year, net profit grew by more than 2 times, compared with 2017, and reached almost 31 billion dollars. Profit from online advertising increased by $ 5 billion.
Google’s financial statements were submitted after trading on the NASDAQ closed, with the result that stocks rose by 2%. However, then, after investors got acquainted with the financial report of the corporation, the shares fell by 3% – this is how businessmen reacted to the company’s achievements. Investors almost did not pay attention to growth, but turned out to be very concerned about other indicators. For example, the cost of attracting traffic accounted for 23% of all advertising revenues, reaching 7 and a half billion dollars.
In fact, the holding has begun to pay more to other companies for displaying their ads or installing Google with the main search engine in the browser. A year ago, these costs were less than $ 1 billion. In addition, two units of Alphabet are experiencing losses – up to 1.3 billion dollars last year, although in 2017 this figure was two times less. The keen eye of investors did not miss the decrease in profitability of operating profit by 3% over the past year. Doubts were also caused by the capital costs of the company, which almost doubled over the year – to $ 25 billion in 2018.
Ruth Porat, Alphabet’s financial director, tried to smooth the situation and explained to investors that the company continues to invest in its own infrastructure and staff to continue to create the highest quality products, and in 2019, the capital costs should be much lower. However, it is unlikely the words of Ruth found support from investors – the position of Google and the entire Alphabet remain rather dubious. On the other hand, of course, the concern of the group is doing well, and it is unlikely that it will ever collapse in the future.