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The alphabet stock falls after Google wins, but the sale comes short

The Alfabet Inc. stock fell about 4% during the extended session on Thursday after the company reported better than expected…

The Alfabet Inc. stock fell about 4% during the extended session on Thursday after the company reported better than expected earnings that quickly beat Wall Street expectations but missed revenue.

The performance was called $ 9.19 billion for the third quarter, or $ 13.06 per share, much higher than the analyst’s average expectations of $ 10.42 per share, according to FactSet. Much like the last several quarters, a significant piece of the alphabet

GOOG,

+ 4.40%

GOOG, + 4.27%

earnings were related to their investments: the company said it contributed $ 1

.38 billion to the bottom of profits in share capital. A change in accounting standards earlier this year triggered these types of disclosures.

Several years ago investors had considered Alfabetes investments in various portfolio companies as a waste of money and time, founder and manager partner Trip Miller said from Gullane Capital Partners, who owns a position in the alphabet.

“People complained [Alphabet] had burned a lot of money and that was a move,” he said in a phone call late Thursday. “We look at the cash and investment portfolio, and we believe there is a capital-based portfolio that is able to generate cash flow or one-off income. We see it as a hidden asset worth much more now.”

Overall, the alphabet reported revenue of 33 , $ 74 billion, an increase of $ 27.77 billion for the period since. “Our business continues to have strong momentum globally, led by mobile search and our many products that help thousands of people every day,” says Alphabet Chief Financial Officer Ruth Porat in a statement with profit release.

Google produces the vast majority of alphabet sales, with most of the huge amount of money coming from Google’s advertising products. Overall, the Google unit reported $ 27.01 billion in revenue, up from $ 21.97 billion last year after reporting the cost of traffic purchases or TACs, the amount of revenue that goes to other companies to send eyeballs to Google websites and its network. Analysts expected ex-TAC ​​sales of $ 27.3 billion, according to FactSet.

Google’s properties took $ 24.05 billion, while the company’s network of websites outside of Google showing its ads reported a sale of $ 4.9 billion.

But Amazon.com Inc.

AMZN, + 7.09%

who also reported the results Thursday after the closing time can be consumed in some of Google’s market share for ads. “We are seeing a larger than expected slowdown in Google’s real estate revenue, which represents its core business,” wrote Monica Peart eMarketer analyst in an email. “This is likely to be related to Amazon’s competition, as consumers are increasingly turning to e-commerce giant for their product searches.”

In addition to describing what money comes from Google’s websites – like Google Search and Gmail – and its network, the company does not break more information. For example, analysts say YouTube is a multibillion dollar company, but the company does not report its actual size.

“Net-net, we see positive progress, whether it meets Wall Street expectations or not,” says Miller. “Things have been highly priced for perfection in this market. [Alphabet] is a business that grows, no matter what the economy or markets do in the short term. “

Google’s ad units pull the lion’s share of the cash, but Google runs several non-advertisers under the Google Other segment, including its cloud computing platform, hardware sales like Pixel phones and Google Home speakers, as well as revenue from Play- The business together reported a turnover of $ 4.64 billion, an increase of $ 3.59 billion a year ago. Analysts averaged that these companies would provide SEK 4.81 billion in sales, according to FactSet. [19659002] The alphabet said earlier this year that its cloud unit saw revenue of $ 1 billion per quarter – Miller says it’s a good “milking” t means “much” to his team – and has not received an update since. At the performance conference interview, Porat said that significant parts of the investments were related to supporting company cloud deals, machines are the biggest component. she also said data center Construction is an increasing share of capital investment and the company is developing 20 data centers around the world. The alphabet reported 5.28 billion dollars in capital injections, up from 3.54 billion dollars for the previous year.

The “other bets” of the alphabet, which are experimental companies outside of Google but within the alphabet’s corporate structure, reported losses of $ 727 million, rising from $ 650 million in last year’s quarter. Other revenue from Bets increased to $ 146 million from $ 117 million.

The alphabet stock has risen by 4.8% in the past year, while the S & P 500

SPX, + 1.86%

index has fallen 0.7%.

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