“Alphabet Inc (GOOGL.O), the new holding company for Google, introduced its first share buyback and beat Wall Street’s profit forecast on Thursday, helped by solid progress in mobile and video advertising, sending the stock to its highest-ever level in after-hours trading,” Deborah Todd and Steve Trousdale report for Reuters. “Revenue and profit well above analysts’ average forecasts, along with the unexpected buyback, was welcomed by Wall Street, which is now betting on further growth.”
“The results come at a pivotal time for the company as it navigates the transition from desktop to mobile, where ads are generally less profitable, while facing growing competition from rivals like Facebook Inc.,” Todd and Trousdale report. “At the same time, it is moving into a new corporate structure that will put more visibility on parts of Alphabet such as its secretive research arm, Google X. Next quarter will be the first in which it reports results under that structure.”
“Company executives touted strength in mobile search for the strong results. ‘Search traffic on mobile phones have now surpassed desktop traffic worldwide,’ said Sundar Pichai, chief executive of Google Inc.,” Todd and Trousdale report. “Shares of Alphabet rose almost 9 percent in after-hours trading to $741, easily a record. At that level, the company’s market value would be around $500 billion, making it the second-most valuable company in the S&P 500 after Apple Inc.”
“The announcement that Alphabet would buy back up to $5.09 billion of its Class C shares came as a surprise. Mature technology companies such as Apple Inc. and Microsoft Corp. have come under intense pressure in recent years to give back more cash to investors,” Todd and Trousdale report. “The company said the number of paid clicks, in which advertisers pay only if a user clicks on the ad, rose 23 percent, compared to an 18 percent increase in the previous quarter. Cost-per-click, or the average price of online ads, fell 11 percent in the quarter. ‘Our value proposition to markets of all sizes is simple. Google can help you show the right ads to the right people at the right moment,’ Pichai said.”
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MacDailyNews Take: Google continues to utterly dominate online advertising.