Alphabet's higher spending worries investors

Google parent Alphabet reported quarterly earnings beating Wall Street expectations

A neon Google logo is seen as employees work at the new Google office in Toronto, November 13, 2012. PHOTO: REUTERS

Google parent Alphabet reported quarterly earnings beating Wall Street expectations on Monday, but shares slipped, with investors apparently focused on rising costs at the technology giant.

Alphabet reported a profit of $8.9 billion in the fourth quarter on revenue that was up 22 per cent to $39.3 billion from the same period a year earlier.

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"With great opportunities ahead, we continue to make focused investments in the talent and infrastructure needed to bring exceptional products and experiences to our users, advertisers and partners around the globe," said Alphabet chief financial officer Ruth Porat.

Alphabet shares were down 3.6 per cent to $1,100.09 in after-market trades that followed release of the earnings figures from the final three months of last year.


One factor making the market wary was a 29 per cent drop in "cost per click" or the average price of digital ads, the main source of revenue for the tech giant.

The report offered no detailed breakdown of income but Google took in the overwhelming majority of revenue in the quarter, $39.1 billion, with $32.6 billion from advertising.

The company's "other bets" including its autonomous driving division Waymo and its life sciences and cybersecurity units took in $154 million in revenue. Those operations showed an operating loss however of $1.3 billion.

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Industry tracker eMarketer forecast that Alphabet's money-making engine Google would take in $102.43 billion in digital ad revenue this year, commanding 31.3 per cent of the global market.

Alphabet's headcount grew to nearly 99,000 from 80,000 employees during the course of the year as expenses at the internet colossus climbed.
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