Alphabet beats Wall St estimates, but spending worries investors
Alphabet Inc`s fourth-quarter revenue and profit beat Wall Street`s expectations on Monday but sharply higher spending, as it added data centres and marketed its services heavily during the holidays, worried investors.
The company`s shares, which have risen almost 17 percent over the past six weeks, fell 2.3 percent to $1,114.60 in after-hours trading.
Partly because of the higher spending, Alphabet reported an operating margin of 21 percent in the fourth quarter, down from 24 percent a year ago.
Facebook Inc`s better-then-expected fourth-quarter results last week had lifted expectations for Alphabet as they suggested that concerns about a global economic slowdown may be overblown.
Alphabet`s fourth quarter revenue rose 22 percent from a year ago to $39.28 billion, compared to the average expectation of $38.93 billion among analysts tracked by Refinitiv. About 83 percent of the revenue came from Google`s ad system.
Alphabet had $31.07 billion in total fourth-quarter costs and expenses, up 26 percent from last year. Capital expenditures rose 64 percent compared to last year, up to $7.08 billion.
A run-up in spending has reflected Google`s efforts to boost staffing on its cloud computing division, promote its consumer devices and YouTube subscription packages and acquire office buildings in Silicon Valley and New York.
Quarterly profit was $8.95 billion, or $12.77 per share, compared with a $3 billion loss a year ago. That compared to analyst estimates of $7.69 billion, or $10.87 per share.
The loss last year related to a one-time charge from new U.S. tax rules, while earnings since then have benefited from new rules about valuing Alphabet`s dozens of investments in external startups. Fourth-quarter earnings also benefited from a $1.3 billion unrealized gain related to a non-marketable debt, Alphabet said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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