 posted weaker-than-expected figures for the fourth quarter, feeling the impact of a higher tax rate.){kind=link}
Google’s parent company Alphabet Inc (NASDAQ:GOOGL) posted weaker-than-expected figures for the fourth quarter, feeling the impact of a higher tax rate.
Google faced a higher tax rate of 22 percent in the fourth quarter, compared to 19 percent for the year overall, making a dent in profits. However investors were cheered by the company posting a stronger-than-expected 22.2 percent increase in quarterly revenue, with Alphabet’s net income rising to $5.33 billion in the fourth quarter.
The company earned $9.36 per share, below the average estimate of $9.64 per share, according to Thomson Reuters I/B/E/S.
“If you look above that, it’s business as usual,” said analyst James Wang of ARK Investment Management told Reuters. “There has been no margin compression in the actual business.”
The strongest progress was seen in Alphabet’s ‘Other Bets’ division, which saw a hefty jump in revenue from $150 million in the same quarter last year to $262 million this year. Losses in the division also shrunk, from $1.2 billion in Q4 2015 to around $1.1 billion in the fourth quarter this year.
Whilst ‘Other Bets’ is only a small proportion of the business as a whole, it represents a strong future in a number of diverse markets. CFO Ruth Porat said Alphabet would “continue to calibrate the magnitude and pace” of its investments in other bets, and “exercise careful stewardship over the amounts and pace of investments.
Analysts also took heart from the company’s move to diversify beyond advertising, with Porat highlighting that the company was broadening its business and moving towards growth in hardware, app sales and the cloud business.
Alphabet’s shares in extended trading fell around 2.5 percent in early trading, with investors mixed on Alphabet’s report. Shares are currently down 0.17 percent at 856.98 (0936GMT).