Google gives Alphabet a boost

Google's strength in the internet business has once again brought its parent company Alphabet significant growth in turnover and profit in the past quarter. Revenues rose by a fifth year-on-year to 22.45 billion dollars. Profit jumped by a good 27 percent to 5.06 billion dollars, as Alphabet announced after the close of the US stock exchange on Thursday. The share price rose by 1.28 percent at times in after-hours trading, as the figures exceeded stock market expectations.

Google's advertising revenues remain the mainstay of Alphabet's overall business. They increased by 18 percent to 19.8 billion dollars. Google continues to earn most of its money from clicks on ads in the Internet search environment. At the same time, however, the contribution from advertising on the YouTube video platform and new advertising formats for mobile devices is also growing.

Low prices for mobile advertising

Revenues per click fall continuously with the spread of smartphones - because the usual auction process results in lower prices for advertising space on mobile devices. Google has always managed to more than compensate for this with a higher number of clicks. In the past quarter, the average revenue per click fell by eleven percent year-on-year - but the number of clicks jumped by a third at the same time.

Noticeable cost factors for Google include the expenses for operating the data centers and the entry into the business with its own smartphones with the recently introduced Pixel model.

Rest of Alphabet burns money

Meanwhile, it remains the case throughout the Group that Google earns the money with its Internet business and the Android operating system, while the rest of Alphabet generates high costs with low sales. The revenues of the divisions other than Google increased year-on-year from 141 to 197 million dollars. They posted an operating loss of 865 million dollars - an improvement on the previous year's 980 million dollars.

CFO Ruth Porat had repeatedly announced that she would become stricter on costs in the other business areas. The other areas include some that are not yet a business, such as the development of software for self-driving cars or delivery drones. At the same time, there are also some that are already on the market, such as the home networking company Nest or Google Fiber, which sells fiber optic connections. This week, the expansion of Google Fiber's network was halted in eleven cities and the boss left. Previously, executives had already left Nest, the robot car project and drone development. (SDA)