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Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results
- zitterbewegung 10y agoAlso, Alphabet(GOOG) missed expectations. https://finance.yahoo.com/m/e866d713-3773-3b26-83ce-07bb214b9b7a/ss_live-blog%3A-alphabet-stock.html https://finance.yahoo.com/m/e866d713-3773-3b26-83ce-07bb214b...
- afthonos 10y agoPersonal pet peeve: the map is not the territory. Alphabet didn't miss anything; the analysts mispredicted performance.
- fnovd 10y ago>Alphabet didn't miss anything; the analysts mispredicted performance. Taken to the extreme, no company ever underperforms and every unrealized expectation is the fault of the analysts.
- btian 10y agoFalse. Most companies provide guidance. They under perform if they do worse than guidance. Alphabet on the other hand does not provide guidance. And frankly it's quite silly to call 20+% growth a miss.
- gigatexal 10y agoAnd yet in after-market trading the stock is down some 3%. I do think though it'd be cheaper for Google to find a way to diversify away from ads now that it's likely having more competition from the likes of Facebook and Snapchat but I'm no MBA nor an analyst so what do I know.
- gigatexal 10y agoif you're going to down vote, please respond with why
- dangrossman 10y ago3% is a normal daily up and down for GOOG. In the past 15 minutes, it's regained 1/3rd of that loss in after-hours trading. The share price is still basically sitting at its all-time high. Your comment is potentially misleading, confusingly worded, and it's unclear what point you were trying to make. Some combination of those things should explain any downvotes.
- gigatexal 10y agoSome data to back up the closing price (all but useless given the after-hours price and the apparent open for tomorrow being pretty much what it was today before earnings): I took the last 20 days of adjusted closing prices for GOOG from finance.yahoo.com, and a -2.18% change is 2.76 std-deviations away from the average fluctuation. Not significant but still a lot. Thanks for response.
- deleted 10y ago[deleted]
- btian 10y agoWhat do you think it's doing with Google Cloud, Waymo, etc.?
- curiouscats 10y agoUndue attention is paid to short term blips. And it is indeed silly to get excited about exceeding analysts guess or falling short by a couple pennies a share. About the 22% growth, that isn't being called a miss. They actually exceeded guesses on revenue. Net profit, while up, is what is being called a miss. Which net profit you want to use changes the increase but GAAP earnings were up 7%.
- nerfhammer 10y agoIt's a miss if the market had already priced in expectations that it would be better than that; indicating that the market price is wrong and a correction could be expected imminently. To the extent that we can assume equity prices mean anything, of course.
- afthonos 10y agoOrthogonal to my peeve. :-) After earnings, there are two questions: 1. How did X do? 2. How did analysts think X would do? Perfect analysts would predict Xs earnings every time, and the stock would be unaffected by announcements. But analysts aren't perfect. That's ok! What's not ok is that the headlines are invariably "X misses expectations". No, the expectations were wrong. I'm not saying a company can't do well or badly. Only that its job is not to match analyst expectations, and "X misses expectations" promotes that fiction.
- WalterBright 10y agoIf you're used to reading the financial news, the headline is fine, since you know what they're talking about.
- afthonos 10y agoI'm not so sure. "Analysts Miss X Results" immediately makes you wonder "why", which is a fair question. "X Misses Expectations" instead makes you think X had a bad quarter. I think forcing people to make the conversion in their head every time is bad headlining. Of course, there's something to be said for it being a "term of art". This may just be my layman's interpretation.
- WalterBright 10y agoEvery field has its own jargon and shorthand notations. This particular headline is phrased in the usual way for such things.
- afthonos 10y agoTrue and fair, yet see pc86's comment and my reply to it for exactly the kind of confusion that can arise. :-)
- pc86 10y agoAnalysts aren't saying "I think GOOG will grow by X% because reasons," they're saying that based on all factors, if GOOG is run well and executes well, it will grow by X%. Growing by less, even when "less" is 20% and many billions of dollars, means that the analysts believe there is some inefficiency and GOOG, which is why a stock can drop after a company posts a 20% gain in revenue.
- theelfismike 10y agoInteresting the effective tax rate went from 5% last year to 22% this year. What would cause that?
- btian 10y agoMean reversion? 5% is very unusual.
- neximo64 10y agoYou don't pay taxes on the mean. They are unusual because they were minimized.
- kbutler 10y ago"Reversion to the mean" is the process where later data is more typical than an outlying datum, so aberrations caused by outliers are averaged out, giving a result progressively closer to the mean of the data as subsequent data is added.
- neximo64 10y agoIn short, that the rate over a decade instead of over a year is the official corporate tax rate. For Google it doesn't work out this way, still.
- hiddencost 10y agoYou really should Google the phrase "reversion to the mean", because you clearly have no idea what is going on but remain confident.
- neximo64 10y agoGoogles mean or even max is far from 35% over their entire history. I fail to see the relevance of your argument. Perhaps you think Google will eventually in the future pay 35% and everything in the past was just an anomaly? Because it's a laughable thought, or if you're absolutely convinced that is the case you're incredibly naive. You're mixing up mean reversion with extrapolation.
- aresant 10y agoEditorializing: Paid clicks on Google properties +43% - "yaaay we're driving more paid search!" Cost-per-click on Google properties -16% - "ouch our advertisers are seeing less value on these add'l clicks!" To me the second part of this is going to be most interesting to watch - if the clicks they are onboarding are lower quality, this is going to be a net negative.
- nyrulez 10y agoIt doesn't work like that. Lower CPC does not mean lower value. It just means Google pushing into new eco-systems where CPCs are different from desktop search (e.g. mobile, YT, new publishers/partners) and it may take some time to reach equilibrium among the various actors depending on the ROI of the medium for the respective actors.
- pisarzp 10y agoPrecisely that. Change in Google's CPCs is a great example of Simpson's Paradox. CPCs on every property separately are growing, but aggregate is declining due to much faster growth in areas where CPCs started low
- maverick_iceman 10y agoAlso new growth will come from developing countries which will have lower CPC than the US.
- gigatexal 10y agocosts could have been driven down by competition not so much by lack of demand or falling quality.
- ariwilson 10y agoIf the half of the world without an Internet connection gets online and starts clicking on ads, their clicks are probably going to be less valuable than the existing rich world clicks. I don't see how that is a net negative for anyone, though.
- MarkMc 10y agoRevenue is up 22% but EPS is up only 7%. I would normally expect Google's EPS growth to be higher than revenue growth. Where are they spending all that extra income?
- tma-1 10y agoOn electricity to train all those deep neural networks.
- bitmapbrother 10y agoTheir DeepMind AI has actually decreased their energy consumption at their data centers. http://www.techrepublic.com/article/google-uses-deepmind-ai-to-reduce-energy-use-at-data-centers-and-save-money/ http://www.techrepublic.com/article/google-uses-deepmind-ai-...
- ec109685 10y agoBut they could still be spending more aggregate money on hardware for their deep learning hardware than previously.
- ChuckMcM 10y agoNotice that their TAC expenses for paid traffic went up over half a billion dollars to 10% of revenue from 8%. They are spending more to buy more traffic to grow click rate to cover lower CPC rates. You can model that like taking a hit to the gross margins.
- ucaetano 10y agoTaxes.
- MarkMc 10y agoQuite right - thanks. If Alphabet had paid the same tax rate as the previous year then net income for the quarter would have been $6.49 billion, an increase of 32%.
- spectrum1234 10y agoSo crazy these numbers aren't in thousands like most companies' financials but in millions...
- 101km 10y agoThey aren't the only ones. Apple Reports Fourth Quarter Results : http://images.apple.com/newsroom/pdfs/Q4FY16DataSummary.pdf http://images.apple.com/newsroom/pdfs/Q4FY16DataSummary.pdf "(Units in thousands, Revenue in millions)" Walmart: http://s2.q4cdn.com/056532643/files/doc_financials/2017/Q3/Q3-FY17-earnings-release-final-Nov-16-108pm.pdf http://s2.q4cdn.com/056532643/files/doc_financials/2017/Q3/Q... And so on.
- Analemma_ 10y agoThe financial statements of these companies boggle my mind sometimes. In addition to Google's, I saw this bit on Microsoft's today: > Accounts receivable, net of allowance for doubtful accounts of $426 and $335 What they're saying is, that's $426 million dollars they're owed that they expect to not get, because of defaults and deadbeat customers. And it's just a line item!
- johnm1019 10y agoThere are old, large, non-tech companies that do this as well https://corporate.ford.com/content/dam/corporate/en/investors/investor-events/Quarterly%20Earnings/2016/2016-3Q-Corp-Earnings-slides.pdf https://corporate.ford.com/content/dam/corporate/en/investor...
- oneplane 10y agoAre we not going to talk about the fact that they are on abc.xyz? I think it's hilarious.
- chrisseaton 10y agoIt's just their corporate domain name isn't it?
- ehsankia 10y agoYes, it's the alphabet website.
- chrisseaton 10y ago...so why's it hilarious?
- tajen 10y agoIt's fun to have your own extension, isn't it? then you can host http://hooli.xyz http://hooli.xyz as well, which is good fun too (It's the parody website of the equivalent of Google in the TV show "Silicon Valley", which in itself is a good amount of self-irony).
- jaredsohn 10y agoIt doesn't look like Google owns .xyz, though. The hooli site says Copyright HBO on the bottom. http://www.cnbc.com/2015/08/10/googles-abcxyz-just-put-this-guy-on-the-map.html http://www.cnbc.com/2015/08/10/googles-abcxyz-just-put-this-...
- tajen 10y agoYou're correct, very interesting. In summary, Daniel Negari paid $185k for the .xyz, purchased a few other gTLDs, and Alphabet supposedly only pays $9 per year for its domain. I presume Google is confident in xyz having no security breach and a good disaster recovery procedure ;)
- booh 10y agoDo we care about this, really ?
- theDoug 10y agoSorry you went through the effort of making an account to ask something that was evident.
- booh 10y agoDo we care about this, really ?
- bitmapbrother 10y agoThis was due to a one time tax hit. >Alphabet was forced to swallow a $586 million tax charge on the non-GAAP line related to its stock-based compensation, costing the company about 83 cents a share — the difference between a substantial earnings miss and a huge beat. >The tax charge is the result of a rule change in the U.S. targeting companies’ use of stock-based compensation to sweeten their adjusted earnings numbers. The Financial Accounting Standards Board last year implemented changes that force companies to better account for the tax benefits of paying employees in stock instead of cash, and the charge reflected the benefit Alphabet had realized for the full year. http://www.marketwatch.com/story/the-tax-hit-that-made-google-miss-on-earnings-and-the-big-change-that-will-keep-it-from-happening-again-2017-01-26 http://www.marketwatch.com/story/the-tax-hit-that-made-googl...
- JumpCrisscross 10y ago> This was due to a one time tax hit Was it a one-time hit or is this the new normal for stock-based compensation (SBC)?
- bitmapbrother 10y agoIt's both as they're going to adopt the same stock based compensation as other companies going forward.
- curiouscats 10y agoI believe the "one time tax hit" is adjusting for their past fake non-GAPP earnings which pretended giving away billions in stock wasn't material (I am guessing, so I might be wrong). The practice of excluding billions in stock giveaways for non-GAPP earning (as not a real cost) was long seen as misleading by me and many others http://investing.curiouscatblog.net/2016/04/21/buybacks-giveaways-to-executives-and-non-gaap-earnings/ http://investing.curiouscatblog.net/2016/04/21/buybacks-give... They also decided to stop using that deceptive practice, so going forward the non-GAPP earnings will be less fake. It is sad Google used such deceptive practices. I believe it was forced into being less deceptive by accounting standards not by some decision to be less deceptive going forward.
- shmerl 10y agoIs there some way to see how well Google Fiber is doing? It's really worrying that they seem to be slowing it down. Without such disruption and newly corrupted FCC, we might be entering pretty bad times for the ISP users.
- ojbyrne 10y agoI guess you missed the news: https://arstechnica.com/information-technology/2016/10/google-fiber-laying-off-9-of-staff-will-pause-plans-for-10-cities/ https://arstechnica.com/information-technology/2016/10/googl...
- shmerl 10y agoI didn't miss it. But it doesn't provide any financial info. And quotes like "Larry Page got tired of it" which were floating around the time that article came out, weren't really helpful. What I want to understand, is Google Fiber profitable or not? Just being "tired" because it grows slower than they expected, isn't a good reason to gut it.
- sanxiyn 10y ago> What I want to understand, is Google Fiber profitable or not? Just being "tired" because it grows slower than they expected, isn't a good reason to gut it. Why is it not a good reason? Even if Google Fiber is profitable, it can still be a bad idea after you consider opportunity cost.
- shmerl 10y agoBecause it shows they they didn't really mean it. If it's profitable, and they really wanted to disrupt the stale ISP market, they should have persisted. Otherwise they just showed that they aren't any better than incumbents.
- pc86 10y agoIt can be profitable on paper but be a net loss after opportunity costs are factored. If it makes $500 million a year in profit, but the resources devoted to it could be used on a project that is reasonably believes to offer (for example) $700 million a year in profit, it makes financial sense to kill Fiber.
- MarkMc 10y agoNet income before tax: 2012: $14,469 m 2013: $15,899 m (up 9.9%) 2014: $17,259 m (up 8.6%) 2015: $19,651 m (up 13.9%) 2016: $24,150 m (up 22.9%) Impressive growth for such a big company. Sources: https://abc.xyz/investor/news/earnings/2016/Q4_alphabet_earnings/ https://abc.xyz/investor/news/earnings/2016/Q4_alphabet_earn... and https://www.google.com/finance?q=NASDAQ%3AGOOGL&fstype=ii&ei=QeWKWJG5B8OJ0gSGsJKoBA https://www.google.com/finance?q=NASDAQ%3AGOOGL&fstype=ii&ei...
- jboggan 10y agoThe way I like to think of it is that Google has a wondrous faucet that constantly exudes liquid gold, about a cubic centimeter every second. It is our job to keep the faucet open. Occasionally we also do other cool stuff. (19.32 gr/cm^3)(37.88 $/gr)(60 * 60 * 24 * 365 s/year) ~= $23B, close enough.
- samcollins 10y agoNice
- eutectic 10y agoThe density of gold at its melting point is actually 'only' 17.31 g/cm3.
- grn 10y agoYou can see Ruth Porat (Google and Alphabet CFO) and Sundar Pichai (Google CEO) review their results on an hour-long webcast: https://www.youtube.com/watch?v=A0Gqd_r-8ng https://www.youtube.com/watch?v=A0Gqd_r-8ng
- brilliantcode 10y agoso Adwords is literally a money printing machine that shows no sign of slowing....