Disappointing growth hits Google parent Alphabet shares

[SAN FRANCISCO] Google parent Alphabet on Monday reported rising profits in the final three months of last year amid growth in digital advertising and cloud computing, but shares took a hit on disappointing revenue growth.

Profits rose 19 per cent from a year ago in the quarter to nearly US$10.7 billion as revenues increased 17 per cent to US$46 billion for the internet giant.

Alphabet shares slipped four per cent in after-market trades that followed release of the earnings figures, which showed stronger-than-anticipated profits but weaker growth than most forecasts.

"Our investments in deep computer science, including artificial intelligence, ambient computing and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet," said chief executive Sundar Pichai.

The results for the fourth quarter marked the first time the company broke out figures on its YouTube advertising and cloud computing revenues, both of which showed sharp gains.

"We have consistently expanded disclosure (and) the expansion today we think is the most relevant data," chief financial officer Ruth Porat told reporters after the earnings release.

The California tech giant, which dominates online search and has developed the Android mobile operating system, has been working to reduce its dependence on digital advertising which delivers most of its cash.

It said its cloud computing services took in US$2.6 billion in revenue in the past quarter, up more than 50 per cent, and nearly US$9 billion for the year.

Still, Google advertising took in the lion's share of revenue at US$38 billion in the quarter, and more than 80 per cent of its annual revenues of US$162 billion.

LOSS FOR 'OTHER BETS'

Alphabet's "other bets" which include operations including Waymo autonomous vehicles, life sciences and drone delivery, took in US$172 million in revenue in the final three months of the year, producing an operating loss of more than US$2 billion.

The results come with the company facing intense pressure around the globe over its dominance of the online ecosystem, with antitrust reviews in the US, Europe and elsewhere.

The company also has been at the center of a dispute over tax policy for multinational firms, with global negotiators seeking a new treaty on how to tax digital operations spanning the globe.

The company said it set aside US$5.2 billion for income taxes in 2019 and had an effective tax rate of 13 per cent.

Mr Pichai, which had been CEO of Google, was promoted last year to the same role at Alphabet, raising speculation on whether the tech giant might seek to reorganise its operations.

AFP