Google’s Parent Company Posts a Decline in Profits

There was a 4% decline in Alphabet’s share price in after hours trading after the company posted its earnings of the third quarter of 2019. The report shows that it missed analyst expectations as its earnings amounted to $10.12 per share. Google’s parent company suffered from a decline in profits of about 23% as it is faced with rising expenses. The expected profits had been about $12.42 per share. The decline in quarter profits of 23% meant that they were $7.07 and this was mostly due to the increased investments in development, research and marketing.

It was noted by executives that the advertising revenue of the company, which forms the bulk of its profits, was around $33.92 billion in the third quarter. This was significantly higher than the third quarter of last year, when the revenue was about $28.95 billion. The total revenue earned by Alphabet, which was about $40.5 billion, managed to surpass analyst expectations. Ruth Porat, the company’s chief financial officer, said on Monday that the company has always stated that they are focused on managing their business in the long term instead of a quarterly basis. She added that they were still dedicated to enhancing the users’ experience in the long run.

It was also highlighted by Alphabet that its revenues from some of its ‘other bets’, such as its subsidiaries like the self-driving car unit Waymo, also amounted to $155 million, which is an increase from the third quarter last year when they were $146 million. As far as losses during the quarter are concerned, they amounted to $941 million, which were higher than a loss of $727 million in the same period last year. Still, experts noted that the company continues to maintain a solid growth where advertising revenues are concerned, which is undoubtedly a good sign for its ad business.

Alphabet is the world’s dominant provider of advertising, internet research and video services. In recent years, the company has upped its spending on consumer electronics and cloud computing because it considers them crucial to maintaining its industry leadership.

The disappointing earnings announcement comes as Google is faced with major challenges, not only from outside regulators, but internally as well. Last month, inquiries were announced by 48 state attorney generals into Facebook and Google, as there is an increase in calls of breaking up big technology companies. Democratic candidates for the 2020 presidential elections, such as Bernie Sanders and Elizabeth Warren, have made antitrust issues a central part of their campaigns.

Apart from that, even the company’s employees have pushed back against its internal policies. This included posting a public petition in August, which called on the company to not pursue a contract with Immigration and Customs Enforcement or US Customs and Border Protection. In addition to this, thousands of employees also chose to walk out of the company in 2018 in protest against harassment policies.

Nevertheless, Alphabet doesn’t seem to be stopping its spending spree as it has now expressed its interest in investing into Fitbit, the wearable device maker.