Google Parent Alphabet's Ad Sales Hit Record, but Costs Pile Up--4th Update
October 28 2019 - 8:03PM
Dow Jones News
By Rob Copeland
Quarterly results from Google showed the complexity of operating
its internet empire, as robust growth in online advertising sales
was overshadowed by rising costs and weak performances from some
long-held company investments.
Its parent, Alphabet Inc., on Monday reported third-quarter
revenue of $40.5 billion, a rise of 20% from the same period last
year. While that would be enviable growth for many companies, the
clip is modestly below Google's pace historically. Also, for Google
more than others, strong results raise concerns about its market
dominance. Its ad revenue rose 17% to $33.9 billion, contributing
to an overall profit of $7.1 billion.
Analysts and investors are encouraging the company to continue
its pursuit of new advertising opportunities for such units as its
YouTube video platform and the ubiquitous Google Maps app. Yet such
efforts to generate profit across the conglomerate could further
animate antitrust regulators.
The Trump administration and 50 attorneys general have already
opened wide probes into Google, including whether it has an unfair
advantage over smaller advertising rivals.
The Department of Justice's antitrust chief, Makan Delrahim,
said last week that a breakup of Silicon Valley's tech giants is
"perfectly on the table" as part of evaluations of whether
companies abuse their market power.
Alphabet's profit for the latest quarter was lower than Wall
Street's expectations and down 23% from a year earlier, when the
result was boosted by changes to the U.S. tax code. The company's
margin for the third quarter was also crimped as costs rose, a
long-term concern for investors.
Alphabet's stock fell 1% after hours. The shares are up roughly
25% this year, in line with the broader technology market.
Advertising is central to the Google narrative, constituting the
majority of the company's revenue, and also because the company is
scant with disclosures on other areas of its business. Alphabet has
resisted requests from analysts to detail the performance of
YouTube, for instance, and combines results from nascent units like
the Waymo self-driving car division, hardware and cloud computing
in a line item that Google simply calls "Other Bets."
Write to Rob Copeland at rob.copeland@wsj.com
(END) Dow Jones Newswires
October 28, 2019 19:48 ET (23:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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