Alphabet -2.5% despite Q4 beats

Alphabet -2.5% despite Q4 beats

For the period ending December 31st, Google recorded $6.8 billion in capital expenditures driven by spending on offices, data centers and servers, said Ruth Porat, Google's chief financial officer, on a conference call discussing Alphabet's quarterly earnings Monday.

The growth, which was better than expected, was fueled in large part by Google's advertising business, which accounted for $32.6 billion of Alphabet's overall revenue - up 20% from $27.2 billion in the year prior.

The fees that Alphabet pays to companies like Apple for Google to be their default search engine rose to $7.4bn up from $6.6bn for the same period a year ago. The search giant's operating income rose 13% year-over-year from $8.6 billion to $9.7 billion. Revenue of $6.5 billion in the quarter represented a 31 percent increase year-over-year.

In turn, like many tech companies, Google made much of their services and cloud business, saying it was "one of the fastest growing businesses across Alphabet".

Still, ads from Google and rival Facebook Inc. are more relevant and effective than most other options - precisely because the companies collect so much information on activity across the internet and beyond. Amazon said its AWS revenues rose 45 percent, to $7.4 billion. When shoppers hunt for holiday gifts, they often use Google's search engine, letting the company send them targeted product ads based on those queries.

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"Advertising continues to be the crux of what they do, but when you look at cloud, that's a major growth area for Google", Ives said. Losses in the category aren't uncommon since the other bets category is understood to be an umbrella for Alphabet's long-shot, experimental projects. These declines raised alarm bells among investors concerned that Google's pricing power for ads continues to erode. This more intense competition is seeing heightened downward pricing pressure being placed on Google, whose costs of doing business are also on the rise.

In the final three months of 2018, Google's CEO was grilled by Congress about data privacy, its employees around the world walked out over sexual harassment scandals, and it disclosed a security bug impacting its largely forgotten social network, Google Plus.

Other Bets, which include Waymo, generated revenue of $154 million, up 18 percent from a year earlier. The cloud unit's G Suite productivity product now has 5 million customers, he said, up from 4 million in last year's first quarter.

'Acquisitions are an attractive complement to what we do to drive organic growth. It's also seeing an "uptick" in $100 million contracts, Porat said.

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