Google's parent Alphabet misses Wall Street view, hit by strong dollar | Reuters

Google's parent Alphabet Inc ( GOOGL.O ) missed Wall Street targets for first-quarter profit and revenue on Thursday, driving shares of the Web search company down 6 percent in late trading on Thursday. Alphabet, the world's No.2 publicly traded company by market capitalisation, just missed analysts' revenue targets, citing the strong U.S. dollar

Reuters April 22, 2016 04:45:12 IST
Google's parent Alphabet misses Wall Street view, hit by strong dollar
| Reuters

Googles parent Alphabet misses Wall Street view hit by strong dollar
 Reuters

Google's parent Alphabet Inc (GOOGL.O) missed Wall Street targets for first-quarter profit and revenue on Thursday, driving shares of the Web search company down 6 percent in late trading on Thursday.

Alphabet, the world's No.2 publicly traded company by market capitalisation, just missed analysts' revenue targets, citing the strong U.S. dollar.

Rosenblatt Securities analyst Martin Pyykkonen said the effect of foreign currency was worse for Alphabet than expected.

"If there had been a little better foreign currency translation, it would have been better than the Street consensus," he said.

The company said consolidated revenue rose to $20.26 billion from $17.26 billion. That was slightly below the $20.37 billion analyst consensus, according to Thomson Reuters I/B/E/S. Earnings per share of $7.50, excluding one-time items, missed the analyst target of $7.97.

"As a result of the ongoing strength of the U.S. dollar, we realized a negative currency impact on our revenues year-over-year of $762 million, or $593 million after the benefit of our hedging program. Holding currency constant to prior periods, our total revenue grew 23%" year-over-year and declined 4% sequentially reflecting holiday seasonality," Alphabet Chief Financial Officer Ruth Porat said on a call after results were released.

Google's advertising revenue increased 16.2 percent to $18.02 billion, while the number of ads, or paid clicks, rose 29 percent, the company said.

Payments to other web sites, known as traffic acquisition costs, rose 13 percent from the previous year to $3.8 billion, and they increased as a percentage of revenue within the Google Network of advertising, Porat said.

That reflects a higher percentage of advertising on mobile and programmatic advertising, an automated system of buying ads. Those are areas Google has targeted for growth and carry higher traffic acquisition costs, she said.

"On the advertising and marketing front, the landscape is changing, it's no longer a Google-centric world in mobile," said Andrew Frank, a senior analyst at Gartner.

Losses increased at the company's Other Bets business, which includes its broadband business Google Fiber, home automation products Nest, self-driving cars and X - the company's research facility that works on "moon shot" ventures.

The loss widened to $802 million, up from $633 million a year earlier. Revenue rose to $166 million from $80 million.

Alphabet's net income rose to $4.21 billion, or $6.02 per Class A and B share and Class C capital stock, from $3.52 billion, or $5.10 per share.

The company's shares fell to $732.94 in after hours trade from a close of $780.

(Reporting by Narottam Medhora in Bengaluru and Deborah Todd in San Francisco; Editing by Peter Henderson, Savio D'Souza and Bernard Orr)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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