Alphabet Reports Rising Profits at Core Google Businesses--3rd Update
February 01 2016 - 5:38PM
Dow Jones News
By Alistair Barr
Alphabet Inc. reported new numbers showing the profitability of
its main Google Internet businesses surged last year.
The disclosure, along with the company's better-than-expected
results in the fourth quarter, lifted shares of Alphabet by 6.4% to
$820.44 in after-hours trading. If Alphabet's gains hold up in the
regular-session trading Tuesday, the company would surpass Apple
Inc. as the most valuable in the world.
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.
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.
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. Revenue from Google's core businesses gained 18% to $21.18
billion.
Over the past year, Alphabet shares have climbed more than 43%
as its Google business improved mobile search ads and cut costs. In
comparison, shares of Apple have fallen roughly 18% over the past
year 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.
During the fourth quarter, Alphabet said it repurchased 2.4
million shares at a total price of $1.8 billion.
Write to Alistair Barr at alistair.barr@wsj.com
(END) Dow Jones Newswires
February 01, 2016 17:23 ET (22:23 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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