Alphabet shares sink despite making $8.9bn profit in last quarter | Technology

Alphabet, the parent company of the internet search giant Google, earned $39.27bn in the last three months of 2018, but its share price sank as its costs rose.

Alphabet’s revenues for the quarter were 22% higher than the same period last year and the company made a profit of $8.9bn, the company announced on Monday. Revenues in the US rose 20% while revenues from Europe, the Middle East and Africa rose 29%, helped by the strength of the euro and the pound.

It was the latest tech company to announce strong revenue growth – news that has cheered investors – but rising costs that come as the company is facing increasing competition from Amazon clouded the news.

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The fees that Alphabet pays to companies like Apple for Google to be their default search engine rose to $7.4bn up from $6.6bn for the same period last year. The costs of its most ambitious projects also rose sharply.

Alphabet’s shares sank 3% in after-hours trading.

Google properties account for nearly all of the company’s revenues – $39.1bn in the last quarter. Revenues from its cloud business, hardware sales and Play, its music and media service, were $6.4bn.

“Other bets”, as Alphabet calls its more experimental businesses including Waymo, the self-driving car startup, its fiber optic cable business and Verily, its health division, had revenues of $154m.

Losses from other bets nearly doubled over the year to $1.3bn from $748m a year ago.

Advertising revenues were up 20% from last year’s fourth quarter, to $32.6bn, the same rate of growth as last quarter.

Alphabet is the last of the so-called Faang – Facebook, Apple, Amazon, Netflix and Google – to report its quarterly earnings.

Before the results were released the company’s share price had rallied after stumbling along with its peers last year.

The rise of the Faangs helped propel stock markets to new highs and their stumble helped to drag down indices across the world last year.

But the latest set of tech results have cheered investors.

Last week Amazon reported its third record profit in a row, making over $3bn in the last three months of the year.

Amazon and Alphabet are increasingly competing for advertising dollars and in cloud computing.

On Monday Apple briefly became the world’s most valuable company once again as investors continued to absorb its better than expected results from last week.

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