Published: Sun, January 29, 2017
Finance | By Laverne Griffith

Marketers Should Note These 5 Things From Google Parent Alphabet's Earnings

Marketers Should Note These 5 Things From Google Parent Alphabet's Earnings

The stock trades at roughly 21 times forward earnings, compared with Facebook Inc's price-to-earnings ratio of 32 and Microsoft Corp's 22. This performance was led by mobile search and YouTube.

Porat said in comments during the conference call that hardware, cloud and Play app store sales all were strong. Revenue growth slowed from 28% in the prior-year period. "Google's core business benefits from scale and offers the potential to improve the efficiency of most aspects of the company's operations", Wieser added.

"We reiterate our Overweight rating on GOOGL and maintain price target of $1,040 following another strong quarter, with accelerating top line growth, reflecting solid advertiser demand". They're Googling everything on their phones, and that remains both a challenge and an opportunity for Google the company.

"From a capital allocation standpoint, we appreciate Alphabet is investing in strategic, promising areas like Google Assistant and hardware, while pausing investment in less rewarding areas like Fiber", Jefferies analysts said. Oracle (ORCL) and International Business Machines (IBM) have also recently become aggressive in terms of spending in the cloud computing space. We believe that, as Google's mobile strategy for content and ads continues to evolve, the ads and content revenues will increase in coming years. Following the conglomerate's policy to clump companies and investments apart from Google into the "Other Bets" category, we see moderate movement in the segment.

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We should also look for stats on the effectiveness and volume of Google's ads, including growth in aggregate paid clicks (up 33% year over year last quarter), which will be similarly broken down between Google's own sites (up 42% last quarter) and those of network members (up 1% last quarter). GAAP operating income for the company grew by $1.2 Billion YoY, with operating margin staying constant at 25%.

Eighty-seven percent of Google's revenue is still from ad sales, rising 17.4% to $22.4 billion in the last quarter. The US user base isn't expected to grow much-growth will be just 3.2% this year, eMarketer estimates-but that reflects the fact that it is at near saturation levels: eMarketer estimates that almost 85% of digital video viewers are YouTube viewers.

In the past year, Google stopped expanding its city fiber project amid rumors of the project's possible sale to an Internet service provider, and even the head of Project Wing, the drone delivery effort, stepped down and some project members were cut or moved to other projects.

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