Alphabet, formerly Google, sets share buyback, shares surge

“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.”

Read more in the full article here.

MacDailyNews Take: Google continues to utterly dominate online advertising.

12 Comments

  1. Yes, Yahoo and Microsoft can’t seem to get off the mat. My take is Google is pushing too much advertising. It’s just now so in your face. Before you noticed it and moved on, now it’s plunged front and center forcing you to deal with it. Each search turns up a bunch of advertising around what you searched for, not search results.

  2. Google sells even more of your personal information than Wall Street expected for even higher profits. Did you get your thank you from Google for so kindly sharing the details of your life?

    1. The market seems to think that Amazon will somehow be able to end up being able to sell everything that is bought and will then be able to magically increase profits. Since they’re already highly efficient I don’t see how they can raise profits without profits, but then why buy from them? The only reason to buy from amazon is if it’s cheap and possibly if you need it urgently.

      The same goes for Google, the market seems to think they’ll reach some tipping point where they suddenly start making massive profits from online advertising.

      Meanwhile Apple’s consistently high and increasing profits are deemed a sign of doom.

      1. Amazon’s price per revenue (P/S) is now valued by the market as high as Apple’s, as if they just needed to flip a switch that raises their margins from zero to Apple’s.

        1. Agreed. It doesn’t take much skill to give something away. Others figured out how to charge more and did. Amazon charges less and makes nothing. How is that a better model?

          I have no idea how Amazon gets a pass from everybody (Wall Street) for having billions in revenues but no income. What is the point of Amazon?

          1. As a business model I agree it seems unusual. As a model for reducing middleman costs between producer and consumer and streamlining the logistics of delivering product and services it’s genius.

  3. Anybody heard about the fun math in their buyback?

    Buyback amount is $5,099,019,513.59, which is the square root of 26 (letters in the ALPHABET) x $1Billion

    Cute!

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