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Mobile, video pump up profit at Google parent Alphabet

Friday, October 28, 2016 - 06:28

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Google parent Alphabet on Thursday delivered higher profits for the third quarter, lifted by gains in mobile and video advertising as the tech giant narrowed losses on its "moon shots." Net profit climbed 27 per cent to US$5.1 billion. Revenue rose to US$22.5 billion from US$18.7 billion in the same period a year earlier.

[SAN FRANCISCO] Google parent Alphabet on Thursday delivered higher profits for the third quarter, lifted by gains in mobile and video advertising as the tech giant narrowed losses on its "moon shots." Net profit climbed 27 per cent to US$5.1 billion. Revenue rose to US$22.5 billion from US$18.7 billion in the same period a year earlier.

Shares rose nearly one percent in after-market trades that followed the release of the stronger-than-expected earnings figures.

"We had a great third quarter," Alphabet chief financial officer Ruth Porat said in the earnings release.

"Mobile search and video are powering our core advertising business and we're excited about the progress of newer businesses in Google and Other Bets."

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It has been about a year since the California internet titan revamped its corporate structure, making Google's internet operations a division of Alphabet and putting units such as autonomous cars and internet service balloons in an "other bets" or "moonshots" category.

The self-driving car effort that was once part of the X lab at Google - devoted to bold, futuristic projects - has become a separate business unit at Alphabet. Little has been revealed of its plans for going to market.

The loss reported from Other Bets in the recently ended quarter came to US$865 million, compared with US$980 million in the same period a year earlier.

"As we reach for moonshots that have a big impact in the longer term, it is inevitable that some efforts will have more success than other," Ms Porat said.

"We are taking the steps necessary to lay the foundation for a stronger future."

Under its new structure, Alphabet is seeking to expand beyond its role as a search engine that provides advertising linked to queries. It has grown revenue in mobile search but is moving to further diversify its revenue stream.

Earlier this month, Google took on rivals Apple, Samsung and Amazon in a new push into hardware, launching premium-priced, in-house designed Pixel smartphones and a slew of other devices showcasing artificial intelligence prowess.

Google also revealed details about its new "home assistant" virtual reality headset and Wi-Fi router system.

But getting more heavily into hardware would entail new costs in the current quarter, Ms Porat cautioned.

"We expect to spend more on marketing in the year-end quarter due to the new products," she said.

The company recently put on hold its "Fiber" initiative, which aimed to deliver ultrahigh-speed residential broadband to a number of cities.

Kansas City in 2011 became the first city chosen by the group to test its Google Fiber internet network, promising transmission speeds of 100 times that of current networks.

AFP

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