Alphabet Reports Rising Profits at Core Google Businesses
February 01 2016 - 5:00PM
Dow Jones News
Alphabet Inc. reported new numbers showing the profitability of
its main Google Internet businesses surged last year.
The new disclosures, reflecting a corporate reorganization late
last year, showed revenue at Google's core Internet
businesses—including search, YouTube and Android—rose 13.5% in 2015
to $74.54 billion. Yearly operating income for these businesses
totaled $23.4 billion, excluding stock-based compensation, up 23%
from $19.01 billion a year earlier.
Alphabet adopted the new structure, and agreed to disclose
additional financial details, in part to respond to investor calls
for more transparency as Google branched into new fields like
health care, transportation and communications. Monday, Alphabet
for the first time reported revenue, operating income and other
metrics for both its main Google businesses and for a group of
moonshots it calls "Other Bets," such as self-driving cars.
For the fourth quarter, the company—as a whole—reported
better-than-expected results.
Alphabet's net income in the December quarter totaled $4.92
billion, or $7.06 a share, up from $4.68 billion, or $6.79 a share,
in the same period a year earlier. Excluding certain expenses,
profit came in at $8.67 a share. On that basis, analysts expected
Alphabet to earn $8.10 per share, according to Thomson Reuters.
Revenue increased 18% to $21.33 billion, which was above the
average analyst estimate of $20.8 billion, according to Thomson
Reuters.
The new numbers showed that the profitability of Google's core
has increased in recent years, excluding the impact of spending on
the moonshots.
Alphabet's Other Bets generated revenue of $448 million last
year, up 37% from 2014. This moonshot segment lost $3.57 billion
last year, compared with a loss of $1.94 billion in 2014.
Shares of Alphabet rose 5.4% to $812.50 in after-hours
trading.
Alphabet shares have climbed more than 43% in the past year as
its Google business improved mobile search ads and cut costs,
putting it within striking distance of overtaking Apple Inc. to be
the world's most valuable company. Apple shares have fallen roughly
18% in the same period, amid slowing growth in sales of its main
product, the iPhone.
Alphabet Chief Executive and co-founder Larry Page had been
searching for big new businesses that can take over the growth
mantle from its online search money machine. This has produced a
complex company that has struggled to manage so many different
projects.
In contrast, Apple has focused on a few core products, making
the company easier to manage. However, this has left it vulnerable
to fluctuations in demand for iPhones.
Write to Alistair Barr at alistair.barr@wsj.com
(END) Dow Jones Newswires
February 01, 2016 16:45 ET (21:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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