Alphabet Inc. (GOOGL) Shares Slipped Lower After Fourth Quarter Earnings

Alphabet Inc. (GOOGL) shares slipped lower on Tuesday after the Google parent unveiled a fourth quarter earnings report that also highlighted its myriad business.

Google posted earnings for the three months ending in December surged 20.2% from the last year to $15.35 per share, that is well ahead of Street forecasts, but also posted overall revenues of $46.08 billion, with a 17.3% growth that missed analysts’ estimates.

Company gave detail on two of its key business units, YouTube and Cloud for the first time, with both showing solid but perhaps not spectacular, the revenue growth rates that caught investors off-guard.

The YouTube revenues were hung at $4.717 billion and $15.1 billion for the year, as compared to a forecast of $25 billion, while the Cloud services sales surged 53% from last year to $2.614 billion, trailing that of rival Microsoft’s Azure platform. The search revenues gained 17% to $27.2 billion.

In early trading on Tuesday, Google shares were marked 3.6% lower and change hands at $1,429.83 each, a move that would cut the GOOGL stock’s six-month gain to around 24% and value the Mountain View, California-based tech giant at just under $1 trillion.

Google said that the Ad revenues surged 16.7% from the last year to $37.934 billion, but that growth rate only just outpaced the traffic acquisition costs, which rose 14.3% to $8.5 billion. In fact, the total expenses, were 18.5% higher from last the year at $36.81 billion as total hiring rose 20.4% to 118,899 employees worldwide.

Google Chief Executive Sundar Pichai over the last three years has touted the business prospects of what he has called three of our biggest bets: YouTube, cloud and hardware.

Chief Financial Officer of Google Ruth Porat said that the Google’s Pixel 3 faced fierce competition from rival high-priced smartphones, early in last year, that could include Apple Inc’s (AAPL) iPhone and Samsung Electronics Co’s Galaxy S series.

Then company released a device half the cost, at $399, the Pixel 3a.  According to analysts and the company, Pixel 3a has sold well but has meant some consumers are spending less with the Google.

Pixel 3a boosted the Google’s smartphone sales to 4.1 million units, in the first half of 2019, which is nearly as much as it moved in all of 2018, according to research company IDC.

In last fall, company has released Pixel 4, has fared worse.  The retailers in January discounted the device by more than $200, steeper than price cuts a year ago for the Pixel 3.

Almost 2.7 million out of 375 million phones units were shipped during fourth quarter globally were a Pixel variety, and a “disappointing” performance, according to tracker Strategy Analytics.

Then Google rebranded several of its speaker products in last May, from Google Home to Google Next.

But again the demand for those devices also slipped, that ultimately effected the Google’s market share, that fell through the first three quarters of 2019, as it shipped about 11.3 million speakers as compared with 14.5 million units over the same period in 2019, according to market researcher Canalys.