Google parent Alphabet disappoints revenue expectations
Alphabet, Google's parent company, reported lower-than-expected revenue at the end of the year. Driven by the advertising business, fourth-quarter revenue rose by a good 17 percent year-over-year to $46.1 billion.
However, this is the weakest growth in five years and analysts had expected around 47 billion dollars in sales. The U.S. Internet giant announced its quarterly figures on Monday (local time) after the close of the U.S. stock market. Investors immediately reacted disappointed to the figures and let the shares fall after trading by about four percent.
Profit, however, rose more strongly than expected. It increased from 8.9 billion to 10.7 billion dollars. For the first time, Alphabet also disclosed the advertising revenues of the YouTube video platform - in the final quarter of 2019, they were 4.7 billion dollars and in the entire past fiscal year, 15.1 billion dollars. For the first time, Alphabet also reported the revenues of its cloud business. Accordingly, they amounted to 2.61 billion dollars.
More competition
The figures underline the question of whether Google will be able to maintain its dominant position in the online advertising business in the long term. On the one hand, the Group is being targeted by the US competition authorities. On the other hand, the competition is putting on a lot of pressure. Internet giants such as Amazon and Facebook are continuously expanding their advertising business internationally. By contrast, Google's growth in this area weakened last year, which management attributed to unfavorable exchange rate effects and one-off changes in the product portfolio.
Another critical issue for the Group is its growing costs. At $36.8 billion, they were 18.5 percent higher in the final quarter than a year ago. For example, the Group is hiring thousands of sales staff, building new data centers and spending a lot of money on marketing.
More transparency
"I am very pleased with our continued progress in the search engine business and in building two of our newer growth areas," Group CEO Sundar Pichai announced, referring to YouTube and cloud services with IT services and storage on the Internet.
Pichai, who after successes as head of the subsidiary Google also took over the leadership of the umbrella company Alphabet from co-founder Larry Page in December, has now set new standards in terms of transparency in his first presentation of financial statements. (SDA)
