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Alphabet Announces Third Quarter 2016 Results
- AndrewKemendo 10y agoAlphabet Revenues: $22,451 Google segment Revenues: $22,254 So everything else Alphabet is a cost center. Even the ROI for the $197M in revenues from Other Bets is offset by Other Bets losses.
- ryanobjc 10y agoBy design, right? The other bets are exactly that - bets. The point of Alphabet is to surface visibility as to how much these bets cost. Not to showcase their profitability.
- ChuckMcM 10y agoI don't think so. As I understand it the "other bets" are supposed to be the things that become big businesses and can shore of the shrinking margins on search advertising and the market share loss to Bing.
- ariwilson 10y agoShrinking margins don't seem like a problem yet. Operating margin went up YoY from 25% -> 26% and revenue was up 20%. For the record, here's the discussion we had last year about search advertising margin: https://news.ycombinator.com/item?id=10796448 https://news.ycombinator.com/item?id=10796448. Odds for your prediction of widespread Google layoffs in 2016 are looking worse by the day. And market share loss to Bing? Don't make me laugh. Bing revenues are up 9% YoY (https://www.microsoft.com/en-us/Investor/earnings/FY-2017-Q1/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2017-Q1...) while Google website income is up 23% YoY (note we don't have breakdown into search but conference call says this was primarily generated by mobile search & YouTube).
- ChuckMcM 10y agoI agree widespread layoffs are probably not in the cards unless the next quarter really tanks. I don't count cutting back projects like Google Fiber as "widespread". Bing's growth and CPC improvement in the Americas comes at the cost of the only other search engine. I wouldn't get too excited about the 20% revenue growth, it didn't quite match the 21% total growth of the segment[1]. [1] https://www.iab.com/news/first-quarter-u-s-internet-ad-revenues-hit-record-setting-high-nearly-16-billion-according-iab/ https://www.iab.com/news/first-quarter-u-s-internet-ad-reven...
- Retric 10y agoThose numbers are rather suspicious when Microsoft is not getting meaningful revenue from bing.
- jholman 10y agoDo you have any evidence that Google is losing market share? The latest reports I could find (from Feb 2016) showed that Bing's incredibly small increase in market share in the Americas is actually less than Google's growth, and at the expense of Yahoo and Ask.
- ChuckMcM 10y agohttps://www.searchenginejournal.com/bings-share-search-market-growing-faster-googles/164425/ https://www.searchenginejournal.com/bings-share-search-marke... sees it a bit differently.
- ariwilson 10y ago0.2% change in one month does not make a trend. Desktop market share is also increasingly less relevant to the search engine game.
- umeshunni 10y ago> market share loss to Bing wut?
- philwelch 10y agoAnd by the time that happens, they have become proper revenue-generating businesses rather than "bets".
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- tkinom 10y agoAlphabet is becoming the Bell-Lab, Xerox Park of this generation? - Invent a lot of cool tech (self driving car, AI) and lets others (Uber, Tesla) to make $ from it.
- oldmanjay 10y agoIt's hard to say google invented either of those things with a straight face. Advanced the state of the art, certainly.
- lalos 10y agoDepends on if their top employees get poached by some of the other companies. In that way, it could happen.
- yolesaber 10y agoAlphabet did not invent the self-driving car or AI lol. C'mon dude, most of Alphabet is PR to recruit the <<best and the brightest>>. Half of the stuff they start up at X they shut down in a year and then don't even release the source. As much as I want your analogy to be true, it just isn't.
- takahisah 10y agoThey must be kicking themselves for spinning off Niantic. With Pokemon Go I guess their revenues in Other Bets segment would have been significantly higher. Why make bets in the first place if they're not going to see it through?
- samfisher83 10y agoWould love to see a desktop vs mobile break down. Its phenomenal that most of their paid clicks are on their site which mean higher margins.
- monkmartinez 10y agoThe first link after a search is often a text ad disguised as link for the exact same link just below. Sometimes, I purposefully click on the non-ad link... I call it "living dangerously!"
- chirau 10y agoI never click on a link that is preceeded by a green 'ad' box, unless I am hunting for a deal on the site i specified in the search box. Like,"99c GoDaddy domains promotion".
- secfirstmd 10y ago10,000 employees added in a year? Wow, that's alot!
- secfirstmd 10y agoAlso interesting the shift in the UK operations from a +5% UK Growth rate based on earlier Sterling currency planning and a real -1% Growth rate thanks to the effect of Brexit.
- mjevans 10y agoThe most real short term effect is a shocking loss of stability. As someone not even living in Europe, but with friends living in the UK, I feel that the best path forward is for Europe to continue to refuse to negotiate anything, for the leaders in the UK to stew and not actually press the self-district button they voted to remove the safety cover from, and for a new set of elections to be held allowing those who are now more cognizant of the terrible decision they allowed emotionally charged rhetoric to goad them in to making to show they've changed their minds.
- secfirstmd 10y agoAgreed, we just moved back to the Ireland from UK and it's been painful currency wise. The UK used to be such a stable place for business but now definitely not...
- UVB-76 10y ago> [...] a new set of elections to be held allowing those who are now more cognizant of the terrible decision they allowed emotionally charged rhetoric to goad them in to making to show they've changed their minds. Amusingly, it's primarily the Remain camp's predictions of total economic catastrophe that have proven false. One might even describe it as "emotionally charged rhetoric"
- mtrpcic 10y agoThe majority of the bad things that the "Remainers" are worried about haven't taken effect yet. The vote happened but things are largely unchanged. I don't think you can use the last several months as proof that the worries of those who voted to Remain were incorrect. That's the same logic as those people who blamed Obama for the 2008 Bailout, when it was very clearly in motion for a long time before he even took office.
- ariwilson 10y agoIt's interesting to note that Microsoft's revenue, operating income, and net income are all now lower than Google's (https://www.microsoft.com/en-us/Investor/earnings/FY-2017-Q1/press-release-webcast https://www.microsoft.com/en-us/Investor/earnings/FY-2017-Q1...).
- pscsbs 10y agoAs someone that is very naive when it comes to earnings reports, do you mind explaining why this is interesting?
- Mikeb85 10y agoBecause Microsoft is a more traditional software company, selling software licenses, plus their once dominant market share.
- CydeWeys 10y agoMicrosoft used to be the 800 pound gorilla in the tech space. No one even came close to it in size. Now Alphabet (and presumably Apple, though verify the numbers) are bigger than it by every conceivable relevant metric.
- ariwilson 10y agoGrowing up (1996-2006), I remember every software industry article was either excited about what Microsoft would do next in some space or terrified that Microsoft would step in and destroy some business. Due to this, there are now a generation of people with an atavistic fear of Microsoft. See also embrace, extend and extinguish: https://en.wikipedia.org/wiki/Embrace,_extend_and_extinguish https://en.wikipedia.org/wiki/Embrace,_extend_and_extinguish
- hga 10y agoAnd our original host noted the sea change when Microsoft stopped being that 800 pound gorilla: http://www.paulgraham.com/microsoft.html http://www.paulgraham.com/microsoft.html
- shmerl 10y agoDo they have details about Google Fiber?
- neom 10y agoTheir CFO said that "Other Bets" generated revenue of $197 million, primarily from Nest, Fiber. Not much mention of cloud except that it grew with "Other Revenue".
- shmerl 10y agoBut was Fiber profitable? What were the expenses? I.e. why would they suddenly "pause" it now?
- neom 10y agoThey did not break it out. Speculation: They paused it because they are going down the intersection.com route instead using the Link brand (LinkNYC and LinkUK) - much eaiser way to bypass regulators but still get access to the built world.
- nyc640 10y agoSomeone asked about it in the earnings call if you're curious [1]. I think it's been widely speculated about before but it seems like they're exploring new technologies (e.g. Wireless) that are more cost-effective [2]. [1] https://abc.xyz/investor/ https://abc.xyz/investor/ [2] https://www.technologyreview.com/s/602730/google-is-cutting-the-cord-on-its-fiber-rollout/amp/?client=safari https://www.technologyreview.com/s/602730/google-is-cutting-...
- shmerl 10y ago> I think it's been widely speculated about before but it seems like they're exploring new technologies (e.g. Wireless) that are more cost-effective And also way lower quality and limited potential in comparison with fiber. I'm basically wondering is it simply usual move for more profits, or fiber itself isn't profitable?
- d4l3k 10y agoStock Repurchase In October 2016, the board of directors of Alphabet authorized the company to repurchase up to $7,019,340,976.83 of its Class C capital stock. The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Is it typical for Google to have stock repurchases? I haven't heard of them doing that before.
- ariwilson 10y agoHappened last year but I think that was the first time: http://www.nytimes.com/2015/10/23/technology/google-q3-earnings-alphabet.html?_r=0 http://www.nytimes.com/2015/10/23/technology/google-q3-earni... Does anyone know what the number $7,019,340,976.83 refers to? The previous buyback amount referred to the square root of 26, the number of letters in the alphabet.
- nickjarboe 10y agoNot a big fan of Class C the stock buyback. As a holder of Class A and Class C shares (from the earlier split), I thought I should sell Class C, that has no votes and buy Class A which get to vote. Mostly out of laziness, I didn't switch up to Class A, but if I can't vote with my Class A shares to buy back only Class A and not Class C, then I don't know which I would buy now. Seems like a backdoor transfer to Google employees who get Class C shares, but I knew what I was getting into with Larry and Sergey controlling the company with their B shares.
- oh_sigh 10y agoOut of curiosity, why do you care if you can vote with your shares on a company this size? Unobtainium shares(class B) already control 64% of the votes, so the odds of your vote mattering is essentially 0.
- gbog 10y agoSide note: did anyone else notice how choosing "Alphabet" as the name of this entity, while apparently neutral and universal, is actually quite heavily loaded? Who in the world is not using "alphabet", i.e. an alphabetic language? China. So this "Alphabet" name just excludes a quater of humanity. Is it by purpose?
- ieatkittens 10y agoOur alphabet is made up of the letters A-Z. If we then take the letters 'L', 'I', 'Z', 'A', 'R', 'D' we can compose the word 'lizard'. Lizard people confirmed.
- T2_t2 10y agoNo, they claim they chose it because it was an ALPHA, BET: https://abc.xyz/ https://abc.xyz/ > We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for!
- labster 10y agoPlenty of people who use abugidas use Alphabet products too. But rest assured that people who use computers in China use pinyin input, and that is alphabetic.
- gbog 10y agoYes but no. Almost all writing systems are alphabetic, but the Chinese characters. It makes them very special and different. And China has its culture rooted in its characters. So using "alphabet" as the name of an entity with an universal reach just means the guys behind either do it by purpose or have a 25% sized blind spot.