Google Parent Alphabet Reports Mixed Earnings As Moon Shot Programs Blast Off

As long as there is advertising on the Internet, Google's parent company Alphabet will be in good shape. That was proven once again as Alphabet capped off the final quarter of 2016 with more than $26 billion in revenue, a gain of 22 percent compared to the same quarter a year prior. Alphabet's earnings paved the way to a profit of $5.3 billion, up from $4.92 billion a year prior. But not all of Alphabet's efforts were profitable.

Alphabet makes most of its money from advertising, but it also has hooks in various other industries. These moon shot programs, or "Other Bets" as Alphabet calls them, provided mixed results. Overall the company's Other Bets doubled revenue to $262 million for the quarter, an impressive gain that bodes well for the future, though the cost to maintain these programs still had them adding up to a collective loss of nearly $1.1 billion. Alphabet is not deterred by the money it is spending on these efforts.


"Our growth in the fourth quarter was exceptional—with revenues up 22 percent year-on-year and 24 percent on a constant currency basis. This performance was led by mobile search and YouTube. We’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets," said Ruth Porat, CFO of Alphabet.

These Other Bets include a wide range of programs, everything from smart home (Nest) and self-driving vehicles (Waymo) to broadband (Google Fiber) and more. The programs do not make up a significant chunk of Alphabet's overall revenue, though its Other Bets category is growing and represents several parts of the market that Alphabet sees itself being a major part of in the coming years.

Losses for Other Bets have been shrinking, too. The category pulled in $809 million in all of 2016, an 82 percent gain compared to 2015, with a full-year loss of $2.9 billion. That's a slight declined versus the previous year, but it shows that these ventures aren't spiraling out of control.

None of this excited investors all that much. Following the earnings report, Google's share price fell by nearly 3.5 percent in after market hours. It's currently down around 1.5 percent.
Tags:  Google, (nasdaq, alphabet