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Alphabet's fourth-quarter revenue, profit beat estimates

Alphabet's fourth-quarter revenue, profit beat estimates

Alphabet's fourth-quarter revenue rose 22 percent from a year ago to $39.28 billion, compared with Wall Street's average estimate of $38.93 billion, according to IBES data from Refinitiv. This represented a growth of 20 percent, which was the same rate of growth for Q4 2017 compared to Q4 2016. Chief Executive Sundar Pichai (pictured) has said only that it's a billion-dollar-a-quarter business, and that was a year ago.

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Alphabet, parent company of Google, announced their earnings today, and despite beating analyst expectations on most metrics saw its share price fall more than 2% in after-hours trading. Growth is slowing and costs are climbing. Growth in headcount will "moderate significantly" as well.

Google for now maintains its pole position atop a digital advertising duopoly with Facebook Inc., which reported better-than expected earnings last week on a 30 percent rise in revenues, virtually all from advertising.

In turn, like many tech companies, Google made much of their services and cloud business, saying it was "one of the fastest growing businesses across Alphabet".

"The company's highest-growth areas (mobile search, programmatic, YouTube, hardware, and cloud) have lower margin profiles than the traditional desktop search business, so we see continued margin degradation for the company as a whole", wrote BMO Capital Markets analyst Daniel Salmon in a recent note. It's got a long way to go and a short time to get there.

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Other revenue for Q4 2018 came in at $6.4 billion compared to $4.6 billion the same quarter past year.

Overall, revenue from advertising rose to $31.6 billion, up from $27.2 billion, respectively. But he didn't provide specific benchmarks.

Google Cloud also drove higher expenses, mostly headcount, which rose from the third quarter by nearly 4,400 people, to 98,771. Amazon.com (AMZN) may be the only other USA company that has more than $100 billion of annual revenue and 20%-plus top-line growth. "What Diane and her team accomplished is phenomenal". Only problem: Some higher expenses for spending on cloud engineers and data centers as well as YouTube content didn't thrill investors. (Nasdaq: ORCL) vet, are working closely on a transition, Pichai said.

The loss previous year related to a one-time charge from new United States tax rules, while earnings since then have benefited from new rules about valuing Alphabet's dozens of investments in external startups. "We are very open to acquisitions". Alphabet's profits were thinner because of its investment in cloud services.

The company added almost 19,000 employees throughout 2018, ending the year with 98,771 employees total.