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Alphabet slides 5% after missing earnings expectations on revenue of $20.3B
- simcop2387 10y ago> The company posted earnings of $7.50 on revenue of $20.26 billion, while analysts were expecting earnings of $7.96 on revenue of $20.38 billion. I'm assuming they mean 7.5 billion, and 7.96 billion respectively but if they aren't then it seems that they should check the couches in the offices.
- ucha 10y agoNo, it's EPS (earnings per share).
- brandoncarl 10y agoEarning per share....
- simcop2387 10y agoThanks. I'm not that up on how things like this are usually reported, so it looked odd to me.
- jerryhuang100 10y agoGOOG/GOOGL's 'other bets' revenue is more than doubled yoy, though they spent 27% more yoy ($657MM just for Q1!!) for their 'other bets' operation.
- ASinclair 10y agoFiber infrastructure is expensive.
- deleted 10y ago[deleted]
- pavs 10y agoDid they invest a lot on fibre infrastructure? There are only in a couple of smallish cities and towns and most of their service deployment is based on existing infrastructure, AFAIK. Maybe I have missed something...
- adventured 10y agoThey're tracking to spend upwards of $3-$3.5 billion in 2016 on Google Fiber. They're likely spending a fair sum on infrastructure as well as everything else. (from Q4 2015) "In the earnings announcement this week, Alphabet (the parent company of Google) shared that most of it’s $869 million in capital spend on “Other Bets” went to Google Fiber, according to CFO Ruth Porat, and that Google Fiber would continue to be a driver of CapEx spending going forward." https://abc.xyz/investor/news/earnings/2015/Q4_google_earnings/index.html https://abc.xyz/investor/news/earnings/2015/Q4_google_earnin...
- kgwgk 10y agoThat is capital spending. They have lost more than $600mn (on $166mn of revenue), without including the $280mn in capex and the $145mn in stock-based compensation.
- jerryhuang100 10y agowould it be valid to say G put more than $1B (657+280+145) in its R&D? that would be way ahead than most fed agencies including darpa for just 1 Q.
- randomname2 10y agoHow did they miss earnings, after buying back $2.3B of stock in Q1?
- losty 10y agoThe two are unrelated. They could spend all their cash on buybacks and the earnings would be the same.
- deleted 10y ago[deleted]
- ucha 10y agoEarnings are reported per share so stock buybacks are actually a pretty common way to make earnings look better. Of course, it doesn't change the total earnings but the number reported by techcrunch would indeed change.
- jonknee 10y agoThe analysts making EPS estimates know about the buybacks too and increase the EPS to compensate.
- deleted 10y ago[deleted]
- randomname2 10y agoBy earnings I meant EPS
- maaku 10y agoStock buyback is not revenue.
- GCA10 10y agoTotal market capitalization is roughly $500 billion. So buying back $2.3 billion of shares only shrinks the number of shares by less than 0.5%. That improves EPS by all of about 3 cents. Not enough to matter.
- tyingq 10y ago"Paid clicks for Google were up 29 percent year-over-year for the first quarter" I'm amazed this trend continues. Page views almost certainly were NOT up 29% yoy. Meaning that clicks are growing faster than page views, in a big way, every single quarter, for years. That's what sets the investor expectations, but I don't see a way this trend continues forever. There's only so much room for additional ads, ad optimization, etc. At some point, you're as optimized as you can be, and growth becomes solely driven by pageviews.
- reality_hacker 10y agoAnd Paid clicks on Google websites 38 %
- mmanfrin 10y agoI imagine part of it is explained by the fact that when I did a search on a mobile device, nearly 90% of the front fold was ad. http://i.imgur.com/S5nClc4.png http://i.imgur.com/S5nClc4.png
- adevine 10y agoYeah, Google has really been expanding the real estate given to paid ads vs natural search results. My guess is they've seen a big shift from natural results to paid results. At some point, though, people will start to believe the value of the search page has suffered.
- bpicolo 10y agoMore likely they ran a few experiments putting more on, and the statistics said more people clicked them. I doubt it's actually that users have a preference towards paid results
- vgeek 10y agoFor the last ~2 years Google has been rolling out changes slightly before earnings are released each quarter. For example, the yellow Ad label a few months ago, and it is likely to switch to Green to blend in with the Advertiser's Display URL. Last week Google Maps Ads switched status from being in Search Partners to being included in ALL AdWords campaigns with Location Ad Extensions. Now Google is displaying ads in Map search results. There are also 4 results on top, 3 on bottom with no sidebar, this reduced inventory in an attempt to drive up CPCs. I've seen CPCs increase 10-15% because of this over the last month. There are also queries that return 7 paid results and only 9 organic results. Google isn't innovating, they're just making ads appear as similar to organic results as humanly possible (if you're a webmaster, you'll get penalized for this) and making sure ads are everywhere possible. Baidu's results have paid listings interspersed without labels, which is what Google is on track to do within 2 years. They're great at equivocating. They penalize sites that build links, yet they themselves send emails soliciting KW heavy anchor text to Play vendors. They'll also look the other way if you're a Google Ventures funded company caught blatantly "spamming", a la Thumbtack and Nest. Mobile CPCs are still roughly 30% lower than desktop, but it doesn't convert nearly as well, so it is worth less. As already mentioned, Google isn't growing search volume, rather increasing the number of ads they're showing, so say 7 ads per page on 1st, 2nd and 3rd pages of results, versus 13 on 1st page and 3 on 2nd, none on 3rd. If your organic results just happen to get worse, users have to dig deeper into the SERPs to find what they're looking for, while also driving an increase in impressions.
- tma-1 10y agoLong-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures[1]: * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. * Ad blocking grew by 41% globally in the last 12 months. * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. [1] https://blog.pagefair.com/2015/ad-blocking-report/ https://blog.pagefair.com/2015/ad-blocking-report/
- magicalist 10y ago> More than 90% of their profits come online advertising actually, it looks like this may be the first quarter where their non-advertising revenue was over 10% of their total revenue. $2,071 out of $20,091 (in millions). Growing 24% YoY isn't too shabby, either.
- eva1984 10y agoAnd...if YTB starts anti-ad-block because they are desperate...what do you think?
- adevine 10y agoBut the majority of that online advertising income comes from ads on their own search results pages, not from adsense ads.
- eru 10y ago
- jhulla 10y agoAlphabet isn't the only big corp down after hours today. As of now: Microsoft - down 5%. http://www.marketwatch.com/investing/stock/msft http://www.marketwatch.com/investing/stock/msft Visa - down 4% http://www.marketwatch.com/investing/stock/v http://www.marketwatch.com/investing/stock/v Starbux - down 4% http://www.marketwatch.com/investing/stock/sbux http://www.marketwatch.com/investing/stock/sbux In each case, the cause is different. But one thing is common, trailing PE ratios of all four are high compared to historical norms. High PE ratios are maintained with high growth in revenue, earnings and margins. Back off even a bit and the invisible hand smacks you in the face.
- not_that_noob 10y agoUpvoted for the funny Adam Smith reference.
- deleted 10y ago[deleted]
- dendory 10y agoIt's interesting to see how Google, a company that has arguably some of the best engineers in the world and the most brilliant technologists, still only makes a decent revenue on online ads. All of their other startups are losing money.
- acchow 10y agoGoogle had $75 billion in revenue in 2015 with $16 billion net income. They are a 17 year old company. I think that's a lot better than "decent".
- ryanobjc 10y agoWhy, you're right - somehow another $20b a quarter business has eluded them! They're normally just all over the place, I have a few in my couch at home. So weird. And yeah, all those other 'bets' - losing money. New things are usually immediately hugely profitable, and even thinking about trying something that doesnt make huge bank right out the gate makes 0 sense. This is in stark contrast to winning companies such as Microsoft, Intel, AT&T, Exxon (and any other oil company), which have all figured out how to get those $80b/year businesses bootstrapped, not to mention who have significantly diversified their revenue from their original business lines!
- adventured 10y ago> not to mention who have significantly diversified their revenue from their original business lines Both Microsoft and Intel very successfully diversified their businesses at various times. I'm not sure you could have named two other tech giants that did a better job of diversifying away from their original product lines (which was not Windows for Microsoft, and was not microprocessors for Intel). Microsoft didn't start out as an operating system company, they diversified into that business. Then they successfully diversified all over again. Windows dominated Microsoft's business for about 15-18 years. That's no longer the case. All profit from Windows could go away tomorrow and they would still be earning around $15 billion per year in net income. They're now a heavily diversified technology conglomerate. Intel was a business initially built on memory chips, which were their first products. They did an extremely good job of diversifying; had they not they would have disappeared with the memory business. "While Intel created the first commercially available microprocessor (Intel 4004) in 1971 and one of the first microcomputers in 1972, by the early 1980s its business was dominated by dynamic random-access memory chips." https://en.wikipedia.org/wiki/Intel https://en.wikipedia.org/wiki/Intel
- educar 10y agoSo, Google makes fantastic products. Much of our online interaction involves Google in some way or the other. And the only way these guys have figured to make money is ads. Why can't they sell products and be like an Apple, Oracle, Microsoft. I am guessing it's too much work to grow in such a massive pace without ads. Ads are a marketers/sales persons dream and these marketers are very likely to spend money. This ad economy is so very sad and it's killed many nice things. Everyone is just giving out things for free and nobody wants to pay for anything thanks to this whole ad economy. News reporting has gone to the dogs because nobody wants to pay. Email will no see decent progress thanks to gmail. Anyway, I feel Google will be a much better company if it can get rid of dependence on ads but I guess it's too late now since it has to answer to shareholders and show never ending growth.
- pmyjavec 10y agoAgreed, I actually moved to Fastmail recently and it costs me annually but the lack of being the product and actually a customer feels nice.
- nightski 10y agoAnother customer of Fastmail. It has served my well and overall has been a much better experience than Google Apps.
- petra 10y agoThe problem is not that nobody wants to pay, but that in the digital economy, content and many software products are relatively easy to copy. And once you got that, you know that the cheapest guy will win and take most of your customers, so why not be the cheapest guy, especially if it pays very well ? The other option is to make your product hard to copy by network effects or data collection, but again, here it's natural for the cheapest guy to win.
- educar 10y agoI don't think it's easy to copy. I can understand that the search market is ad driven. But they have put ads in everything now. Why does gmail have ads? It's not easily copyable and people will take years to build a decent gmail competitor. And good products that didn't have ads like google reader get shutdown :/
- pmyjavec 10y agoI wonder if other search engines are also starting to catch up? I've been using DuckDuckGo for a while now and there was a time when it felt like I was missing out; However the product has improved dramatically of late and forget I'm no longer using Google.
- petra 10y agoIts hard to believe, because tracking and especially tracking over search history both over the immediate term and the somewhat longer term is exactly what enables Google to surface such good results.
- pmyjavec 10y agoI understand the theory behind all that but I'm preferring the results DDG is now giving me. The bangs feature is also really nice. I actually used DuckDuckGo about a year ago but I went back to Google after a month as the results felt crap, but I gave it a try recently and haven't looked back. I haven't felt this was since leaving Altavista!
- cpeterso 10y agoDuckDuckGo's results have definitely improved over the last year. I now prefer DuckDuckGo's SERP UI over Google's and really like the !bang searches. I only need to use Google (!g) when looking for some very technical or recently-crawled pages.
- mc808 10y agoI've disabled search history and Google still tends to give me the most relevant results. Perhaps they also do some customization based on session cookie or something (I know YouTube does for recommendations) and I'm pretty sure IP location still plays a role. But I think it's mainly that I know how to ask Google for what I want, not that Google knows what I want necessarily. I still give DDG and Bing a chance once in a while, just in case, but old habits die hard.
- jmarbach 10y ago
- vonsydov 10y agofuck first prince dies and now this. t
- dimino 10y agoOh no, they only brought in the GDP of the country of Nepal. Fire everyone.
- deleted 10y ago[deleted]