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Alphabet Announces Second Quarter 2019 Results [pdf]
- mykowebhn 7y agoI find it interesting that income more than tripled compared to the previous year's quarter, but their effective tax rate dropped from 24 percent to 18.
- ttlei 7y agoThanks to trump's tax cut.
- tsunamifury 7y agoWhy is that interesting? Corp tax rates are flat, not progressive and there was a significant change last year.
- Ididntdothis 7y agoProgressive corporate taxes seem like a good idea to discourage companies from growing too big.
- dgellow 7y agoWhy would we want that? Does anyone want to discourage companies from growing?
- headsoup 7y agoI think the key words there were 'too big,' not 'growing.'
- rongenre 7y agoWhy would someone want companies to grow to dominance where their size becomes leverage in itself? I'd rather have rich set of alternatives.
- tonyedgecombe 7y agoIt’s an interesting idea, imagine the smallest viable size for a computer manufacturer is $10 million, then after that start applying progressively higher taxes to discourage market domination and encourage competition. I don’t think it would work but there is some appeal to it.
- bduerst 7y agoYou would get a string of shell computer manufacturers making $10 million a year, because rational actors will exploit whatever rule you put in.
- Ididntdothis 7y agoI think there is a point where a company accumulates too much power through its sheer size and further growth is not desirable. I would argue google and others have reached that point.
- TeMPOraL 7y agoMarket economy is like fuel combustion - it's only valuable to society if controlled. You want the combustion to happen to drive the things that matter (wealth and happiness of the society), but you don't want it to get out of control. You want a wealth-generating engine, not a raging gasoline fire.
- idoh 7y agoGoogle feels more like a wealth-generating engine than a raging gasoline fire. Why would you want to dial that back?
- addicted 7y agoI don't get this. Who thinks "I made $61 after tax profit on the last $100 of profits but I will only make $59 profit on the next $100 so I'm gonna chooAe to not make that $59 after tax money. This is a genuine question. Is there any research or evidence that shows that increasing taxes on profits (which is what corporate taxes are) reduces pre tax profits in the US (I'm restricting to the US because it's possible other places have had more ridiculous njmbwrs, even leading to greater than 100% taxes). This isn't a rhetorical question. The same applies to progressive income tax, but I know someone who actually did choose to forego additional income but it waS someone who didn't understand progressive taxes and thought the headline figure apuwd to their entire income instead of the marginal income. I'm assuming reasonably sized companies aren't that stupid.
- joshuamorton 7y agoI tend to agree with you. To play devil's advocate, assume you are Google or Apple. You have (quite literally) 100 Billion dollars in cash equivalent securities sitting around. You could do what amazon does and reinvest those into the business, but there is risk, and decreasing returns on that. Alternatively, you could just invest that money (in which case its not profit, so taxed differently, I believe), or you could pay your employees more. Those second two are, in the long run, potentially worse for investors. Is that good or bad? Unclear. Is that even how the calculus works? Unclear. Is this line of reasoning obviously wrong? No.
- scohesc 7y agoThen you make a bunch of loosely related subsidiaries that do the same thing (see the canadian wireless market) but are owned by the same large company.
- adventured 7y agoQuarterly income tax rates are particularly not very interesting, they're prone to all sorts of blips. Their 2018 income tax rate was 11% for the year. $4.1b in income taxes and $34.9b in pre-tax income. In 2016 it was 19%. In 2015 it was 16.8%. In 2014 it was 21%.
- siliconviking 7y agoYou need to adjust for the $5B EU fine from last year.
- nkg 7y agoHere is the most interesting sentence: "Prior period results excluding the effect of the European Commission (EC) fine of $5.1 billion have been included to facilitate comparison to current quarter performance".
- joncrane 7y agoHow is that interesting? Seems considerate to the reader.
- hestefisk 7y agoThat’s called a pro forma P&L and perfectly reasonable.
- ocdtrekkie 7y agoHonestly, the trippiest thing to me, is that European Commission fines being marked as an ordinary expense line (and likely one that will be used more in the future), they really are making it clear that violating the law and paying the fines for doing so is really just part of ordinary business to them. And obviously, the fines clearly aren't punitive enough to encourage them to revise this behavior.
- utopcell 7y agoYour conclusion makes no sense. Google had an obligation to report these fines. How else would they had done that ?
- rubyn00bie 7y agoThis is literally textbook how-to-do business, if the fines are smaller than what you earn from doing it, you keep doing it because it's profitable. It's why Facebook's $5bn FTC fine is laughable too. You need to fine them an amount relative to their market capitalization to really make 'em feel it, probably around 10%. I'd go as far to say, one would need fine them in the $50-$100bn range to really stop them from doing something (same for any of the $500bn+ companies). If it's profitable to be shitheads, they're are going to account for it, and be shitheads.
- haberdasher 7y ago107K employees
- Despegar 7y ago>On July 24, 2019, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $25.0 billion of its Class C capital stock The reason the stock is up so much. They're going to stop blowing money on stuff they aren't good at.
- deleted 7y ago[deleted]
- snarf21 7y agoEDIT: Apologies, I was incorrect in this assumption We need to solve this by requiring all repurchases to be with post tax money.
- samfisher83 7y agoRepurchases are done with post tax money. The reason why companies do that instead of dividends is because dividends are taxed for the investor again.
- dgellow 7y agoCould someone explains this like I’m five?
- dlp211 7y agoNo because it's wrong. The correct way to say this is that by doing a buyback it allows stockholders to realize their taxes at a later point in time since capital gains are only realized at the time of sale. Dividends are immediately taxed at the capital gains rate which is the same as the LTCG rate.
- georgeecollins 7y agoYou are right about the buyback allowing shareholders to delay the taxable event. But you are wrong that dividends are taxed at capital gains rate. They are taxed as income. Capital gains are taxed at capital gains rate (almost always lower) and they gain can be offset by losses. This is the main advantage of stock buyback.
- samfisher83 7y agoIts kind of funny how they just added a European Commission fines row on their income statement.
- avocado4 7y agoI can't help but think that EU situation has helped Google. A flood of new regulation just keeps entrenching them by killing off any potential upstarts that could compete in Europe.
- cameronbrown 7y agoIsn't this the argument free-marketers have always made? The people who said GDPR would stifle competition? It will be a long time before the outcome of these choices are obvious.
- tick_tock_tick 7y agoI'll have to go digging but there already was a good article that made it to the front page here about how much GDPR has helped google. It had some great numbers and graphs showing a sizable increase to googles marketshare once they were the first ones to be "GDPR compliant".
- the_mitsuhiko 7y agoConsidering how only large tech companies have been fined noticeably so far I doubt that's the case.
- cpwright 7y agoBoth things can be true: only large companies have been fined, but the cost of compliance means that small companies exit the market or never enter. Many companies will attempt to follow the rules, even if they think that the probability of getting fined is low.
- 7y ago
- dvduval 7y agoPaid Click revenue up, revenue per click down. Does this indicate we are seeing more ads? More quantity, less quality? Hmmm...
- dragosmocrii 7y agoYoutube now shows two ads one after another...
- mtgx 7y agoMore ads, yes. https://www.searchenginejournal.com/google-is-delivering-less-organic-search-traffic-than-last-year/318109/ https://www.searchenginejournal.com/google-is-delivering-les...
- bduerst 7y agoIt means more clicks. If CTR is constant, then it means more impressions (i.e. seeing more ads), or it could mean that ad targeting/serving is getting more intelligent. Probably both.
- adamt 7y agoThere's many factors at play here, but note that the majority of Internet subscriber growth is in developing countries. As the spending power of the average Internet user decreases, then CPC/CPM naturally falls with it.
- HugThem 7y agoIs that $5B fine deductable from taxes?
- criddell 7y agoThat would make a $500 million dollar difference so in the end, it doesn't really matter.
- djakjxnanjak 7y agoI love it. Everyone’s claiming a $5 billion fine is insignificant, so there’s no room to argue the tax savings from writing it off is meaningful.
- criddell 7y agoI think it's true though. In part it's because the fine is small but the bigger part is their tax rate is absurdly low.
- formercoder 7y agoIt's on the income statement. So, generally, yes.
- shmerl 7y agoDo they publish Google Fiber results?
- mav3rick 7y agoHN is clearly triggered that Alphabet did well. "Fines not enough". "Taxes not enough." Keep on harping on the same beat while Alphabet does well.
- 11thEarlOfMar 7y agoRevenue is up 19%. Net income up >300%. Most of the revenue and profit from ads. Stepping back for a minute, political polarization has be increasing for about the length of time that Google has been in business. I'm not claiming Google is the cause, but rather that Google's tenure is a proxy for an acceleration in political polarization. [1] Polarization enables outrage. Think Antifa vs. Proud Boys. Pelosi vs. Omar. AOC vs. ICE. Outrage reduces the amount of critical thought people put into the information they see and use to draw or reinforce conclusions they have about other groups, in particular, their polar opposites. Outrage drives clicks, shares, likes and retweets. Clicks, shares, likes and retweets drive views, views drive ads, ads drive revenue. Now, toss neural nets into the cycle. Neural nets do in fact learn and improve as feedback loops transpire. Why wouldn't we expect these systems to learn that among other things, information that increases polarization results in the desired goal of increasing revenue, absent of any deliberate intervention by human beings? [1] https://www.allsides.com/blog/political-polarization-america-two-fascinating-charts https://www.allsides.com/blog/political-polarization-america...
- anilshanbhag 7y agoI would say it is the rise of digital media. Newspapers had a captive audience, now in the digital world everyone has to compete for attention. Google rise happened at the same time as digital media - both coinciding with rise of internet.
- cromwellian 7y agoIt rose after cable deregulation, which gave us 500 channels and dozens of 24/7 outrage outlets. There was plenty of outrage going around on Fox and Rush Limbaugh talk radio before Google. Remember, Roger Ailes pretty much planned for a lot of this.
- asdfasgasdgasdg 7y ago> Why wouldn't we expect these systems to learn that among other things, information that increases polarization results in the desired goal of increasing revenue, absent of any deliberate intervention by human beings? This is all well and good, but revenue is not an input to most machine learning algorithms at Google. First off, there is a pretty serious firewall between search and ads, so any organic results will be completely oblivious to revenue. Search systems literally do not have access to that kind of information. Even within ads, the concept makes sense only if you don't think about it too much. The big money-maker ads are when someone is trying to buy something. Ads around viral content are just not something that people can pay much for, because the margins in the news business are very thin. Now if you want to make an article that the media has learned that spectacle and outrage drive clicks, I am here for it. (But this has always been true. Yellow journalism was a thing more than a century ago.) And I guess you can make an argument that Google facilitates this by pointing you to the media, and by participating in the feedback loop. But I don't think Google revenue is as causally linked to outrage as you seem to believe. After all, correlation usually doesn't indicate causation.
- person_of_color 7y agoOne day SWE3's are going to be taking home 7 figs in their first year.
- jpm_sd 7y agoOther Bets operating loss: ($989) [million] Almost a Billion dollars per quarter!? Put them out of shareholders' misery, already!
- plg 7y agoWhat proportion of their revenues comes from ads?
- glenrivard 7y agoAbout 80% but keeps going down. Google non ad revenue is fastest growing with this last quarter 40% growth.
- MarkMc 7y agoIncredible that Google has been able to sustain almost 20% revenue growth for so long - much longer than most people expected. For the past 6 or 7 years people have been predicting that Google's growth would soon slow because: (a) The number of ads on a search result page had reached saturation point (b) The percentage of people using the internet in rich countries had reached saturation point Although real, these effects have proved to be outweighed by other, less limited factors of growth; in particular Google's ability improve the quality of match between advertiser and user. Even now I think there is significant room for Google to improve this matching - eg. when I put an iPad Pro in my online shopping basket at apple.com but don't buy it, why don't I then see iPad ads on YouTube? When I give Tesla $1,000 to reserve but not buy a Model 3, why don't I then see Model 3 ads reading The New York Times? Apple and Tesla are leaving money on the table, and when they wake up Google will make even more money.
- bduerst 7y agoWith your example, why would Tesla advertise to you after you have already converted on a purchase? In fact, Tesla can use your email address on a negative audience list when advertising on display networks that hit publishers like NYT. I wouldn't be surprised if Tesla was doing this to optimize their ad spend. For purchases where you are retargeted, that's because when you buy something, you're a magnitude more likely to purchase it again (i.e. as a gift, have a backup/travel one, etc.). Goods like automobiles are an exception here, unless you're in the business of buying multiple cars in the same month.
- MarkMc 7y agoSorry I wasn't clear - I haven't committed to purchasing a Model 3, I've simply given a deposit to reserve my place in the queue when they start shipping to Australia in August. I'm still not sure whether to pull the trigger now - I'll probably wait until better self-drive features become available, or may even decide not to purchase it and instead ask for my deposit back.