Alphabet's earnings miss profit estimates as spending grows


The figure posted for profit for Alphabet does not include a tax charge of $9.9 billion, as Alphabet like many in corporate America are posting large one-off expenses during the fourth quarter since the new legislation enacted by Congress was signed by the U.S. President in December.

Google's CEO claims the company's hardware shipments doubled in 2017 compared to 2016.

Alphabet Chief Financial Officer Ruth Porat told analysts in a post-earnings conference call that higher marketing costs coincided with holidays and that payments to partners such as Apple and Mozilla would steady in coming quarters. "We believe this marks the beginning of an investment cycle into emerging revenue lines for the company, which could pressure margins for several years".

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".

Amazon reported a fourth-quarter profit of $1.9 billion - a new record - or $3.75 per share, thanks to tax reform, the company's purchase of Whole Foods, growth in its Amazon Web Services cloud division, and a strong holiday sales season.

The company reported profits, excluding the impact of the tax law change, of $9.70 a share - short of the $10.04 expected by analysts.

The results included sales of the iPhone X for the first time.

Investments are paying off, Pichai said, noting that cloud computing is generating US$1 billion in quarterly sales.

Google Other is made up of non-advertising businesses that comprise of Google Cloud the hardware and Google Play, app store. One surprise for many was sales through the company's voice assistant Alexa, which surpassed the company's own "optimistic" expectations.

Aggregate clicks on Google ads also beat estimates, rising 43%. Expenses jumped 27 percent to $24.7 billion in the fourth quarter from the year-earlier period.

Google parent' Alphabet's earnings showed that total revenues across 2017 hit $110.9 billion for the first time, up from $90.3 billion in 2016.

Another weight on margins comes from the amount Google has poured into hawking its Pixel phones, smart speakers and other devices.

Plus, although Google paid more in TAC on its own properties because of high costs in mobile search, it said it expects TAC to stabilize in the following quarter. GOOGLE reported the revenue of $302 million in Q3 for Other Bets which happens to be a growth from the $196 million in the prior-year quarter. Pichai said he was "especially excited" about the Google Home range of devices, and said shipments of all hardware have doubled since this time previous year.

Also, management announced that John L. Hennessy, who has been working with the company's board since 2004, will become the new chairperson of Alphabet. Harbour Capital Advisors LLC boosted its stake in shares of Alphabet by 65,026.4% during the second quarter.