Just In: Alphabet Earnings Fall Short of Expectations

Earnings of Google parent, Alphabet, rose 20% during the first quarter. Nevertheless, analysts think that the results fell short in as much as the increased losses from the investments of the company in new projects, and the stronger dollar counteract growing advertising demand.

According to The Wall Street Journal, Alphabet shares fell six percent in after-hours trading. This has consequently taken some steam out of a rally which had lifted them 46% in the previous year. With a market capitalization exceeding $500 billion, Alphabet has remained the second-most-valuable company in world next to Apple.

In spite of the segment's revenue more than doubling to $166 million, Alphabet's operating loss from its other bets had widened to 802 million USD from 633 million USD according to a report on The Australian Business Review. "We're thoughtfully pursuing big bets," said Ruth Porat in a statement. Porat is Alphabet's chief financial officer. Ever since the company hired Ms Porat in May, investors have rewarded Alphabet's stock because they are hoping that Ms Porat steps up probe of spending at the company.

Other than the cost of revenue, Alphabet's operating expenses, from $US6.46 billion, had increased to $US7.27 billion during the latest quarter a year ago. The company's headcount also rose from 55,419 to 64,115.

In the meantime, Google being the leading digital-ad platform has tremendously benefited from advertisers who now prefer online promotions, more particularly to smartphones, wherein almost all internets users are spending most of their time. Merkle, a Digital-marketing company, believes that clicks on Google's mobile-search ads doubled during the first quarter.

For the quarter, the company had reported net income of $4.21 billion, or $6.02 a share, up from $3.52 billion, or $5.10 a share, a year prior. Alphabet's total revenue, on a constant currency basis, increased 23%. Google's advertising revenue rose 16% to 8.02 billion USD.

Alphabet, in the midst of the strong financial results, confronts increasing regulatory pressures. European antitrust regulators, on Wednesday, filed formal charges against Alphabet for allegedly utilizing its dominant Android mobile operating system just to benefit its search and advertising business on Smartphones.  EU is likewise pursuing a case against Alphabet for allegedly utilizing its search rankings to take advantage for its own shopping service. But the company contested these allegations.