Google parent Alphabet hit by rising costs

Google parent Alphabet hit by rising costs

A booming digital advertising market lifted Google's fourth-quarter advertising sales by a fifth and helped Alphabet, its parent, to beat Wall Street's profit and revenue forecasts last night.

"In 2018 we delivered strong revenue growth, up 23 per cent year over year to $136.8 billion, and up 22 per cent for the fourth quarter to $39.3 billion", Ruth Porat, Chief Financial Officer of Alphabet and Google, said in a statement on Monday. The company's net income for the most recent quarter was $8.9 billion.

The company had $31.07 billion in total fourth-quarter costs and expenses, up 26 percent from previous year.

Before the results were released the company's share price had rallied after stumbling along with its peers a year ago. Capital expenditures rose to $25 billion in 2018, mostly to keep up with Microsoft and Amazon.

He did share one small nugget meant to highlight the success of one of its newest devices: one in seven Google Home devices activated during the holiday season was a Google Home Hub, Pichai said.

Alphabet has been viewed as a harbinger for the overall stock market, so the results may have an outsized impact when the market opens Tuesday.

Google grew headcount to 98,771 at the end of the year, up from 80,110, with most of the growth coming in engineers and product mangers, and most of that in cloud.

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Google Cloud is a "fast-growing multi-billion dollar business that supports major Global 5000 companies in every important vertical", Pichai said.

Porat said increased operating costs stemmed from licensing content for YouTube, expanded data centre operations and Google's hardware business.

Google faced scrutiny in late 2018 over alleged bias against conservatives on its signature search engine, as well as the decision to provide Android co-founder Andy Rubin $90 million in severance pay after he was sacked amid sexual misconduct claims - sparking a global protest among employees.

Online commerce grew quickly in the final quarter of 2018, helping Google's ad business.

The results beat Wall Street expectations. "Other Bets" revenues, primarily derived from Fiber and Verily life sciences, was $154 million for the quarter, up from $131 million a year ago, with a loss of $1.32 billion, up from a loss of $748 million a year earlier. Alphabet's profits were thinner because of its investment in cloud services.

'Acquisitions are an attractive complement to what we do to drive organic growth.

After peaking in July, Google shares have fallen back to just above where they were trading early a year ago. Referred to internally as "Project Dragonfly", Google was said to be preparing to introduce the censored engine in 2019 but later abandoned the plans.