Despite beating analysts Wall Street not impressed by Google

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.

Fourth-quarter earnings came in at $12.77, beating estimates by $1.19. Sales came in at $39.276 billion, beating estimates by $296 million. Fourth-quarter net revenue, excluding traffic acquisition cost came in at $31.84 billion, beating estimates by $51 million.

Revenues increased 22 percent year-over-year and operating margin of 21 percent, but Alphabet’s share price dropped 3.3% at one point.

“In 2018 we delivered strong revenue growth, up 23% year over year to $136.8 billion, and up 22% for the fourth quarter to $39.3 billion,” said Ruth Porat, Chief Financial Officer of Alphabet. “With great opportunities ahead, we continue to make focused investments in the talent and infrastructure needed to bring exceptional products and experiences to our users, advertisers and partners around the globe.”

Concerns appear to be around how much Google is able to charge advertisers for ads. Cost per click on Google properties such as YouTube and Google Search,  dropped 29 percent from last year and 9 percent from last quarter. Google has seen increasing competiton from the likes of Facebook and Amazon. Amazon, in particular, has been able to grow their advertising business significantly in recent years.

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.”

“Last year we more than doubled both the number of Google Cloud Platform deals over 1 million as well as the number of multiyear contracts signed,” Pichai said. “We also ended the year with another milestone passing 5 million paying customers for our Cloud collaboration and productivity solution G Suite.”

At this point, all of the major tech companies have reported their earnings, and Google, Apple, Amazon and Microsoft are all within a few tens of billions of dollars or less of each other’s market cap, making market watching a much more interesting practice than in recent years, when only Apple dominated.

Do our readers think Google is diversified enough to compete in an increasingly difficult market? Let us know below.

via CNBC