Arcadia Investment Management Corp MI Increases Stake in Alphabet Inc. (GOOGL)

Google Earnings Boom On Investment Gain, Revenue Beats, Stock Gains

Alphabet's sales growth surges, and so does its spending

Alphabet's revenue comes mainly from the Google ad business, which pulled in $26.6 billion in quarterly revenues, compared to just $21.4 billion in the same quarter previous year. For example, Uber sold new shares to SoftBank Group in January in a deal that valued the ride hailing startup at $48 billion, significantly higher than the almost $4 billion valuation at which Google had bought its stake in the company five years ago. Alphabet says it earned around $3 billion on its investment in Uber and other startups.

Net income surged 73 percent from a year earlier to US$9.4 billion, or US$13.33 per share, marking the strongest quarterly growth in more than eight years. It could prompt more users to reject receiving personalized ads online, costing Google a few billion dollars in annual sales, said Brian Wieser, a senior analyst at Pivotal Research. Total traffic acquisition costs amounted to US$4.6billion, 22% of which were from Google advertising revenues. Revenues beat Wall Street consensus estimates by about $870 million, and earnings also beat analyst expectations. Glassman Wealth Services now owns 376 shares of the information services provider's stock worth $350,000 after buying an additional 3 shares during the last quarter. Without Nest's contribution and cost in the mix, the company's Other Bets' operating loss narrowed from $703 million to $571 million on $150 million in revenue, perhaps hinting that the smart-home division is operationally profitable.

CEO Sundar Pichai tried to quell investor fears over how Google's advertising business will be affected by Europe's upcoming privacy legislation during the company's Q1 earnings call.

Google is no longer reporting click volumes and trends for Google Network properties. Carderock Capital Management Inc.'s holdings in Alphabet were worth $4,651,000 as of its most recent filing with the Securities & Exchange Commission. It would be nice to counter that knowledge with numbers on some of its larger and more profitable businesses, like YouTube, but Alphabet seems determined to keep as much of its business a mystery as possible. Also, the money Google pays for ad space on partner sites was substantially up.

Following Facebook chief executive Mark Zuckerberg's highly publicised hearings on Capitol Hill this month, lawmakers from both parties have pledged to introduce new data privacy regulations that would strike at the heart of Google's business. This buyback authorization permits the information services provider to purchase shares of its stock through open market purchases. Google has been adjusting to the new law for about 18 months already.

But with total impressions flat year-over-year and up only slightly from Q4's total, one can't help wonder how close we are to "peak mobile web", akin to "peak auto" we saw in the automobile industry just a couple of years ago.

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