Alphabet is closing in on all-time highs ahead of earnings (GOOGL)

24 July, 2018, 14:41 | Author: Brooke Harris
  • Google parent Alphabet sees record highs despite EU fine

Shares of Google's parent company Alphabet jumped Monday in aftermarket trading after the company reported its second-quarter earnings, despite a drop in profit from a record $5 billion fine from the European Union.

The European Commission hit Google with a 4.3 billion euro ($5 billion) fine last week for abusing the dominance of its mobile operating system. Google has said it will appeal the EC decision. Remove the fine and Alphabet's earnings rise to $11.75 per share and net income soars from $3.2 billion for the quarter up to $8.3 billion. If you were to look at Alphabet's core operations, without taking into account the $5 billion fine, we'd be looking at a quarter with $7.88 billion in operating income - a full $1 billion higher than the same quarter previous year.

Pichai also highlighted Alphabet's computing video and advertising platforms, noting that the company generated $7 billion in revenue for its software developers, content creators and publishers.

"We delivered another quarter of very strong performance", chief financial officer Ruth Porat said.

Google parent Alphabet sees record highs despite EU fine

The rise in spending on capital projects didn't stop the tech giant from posting huge numbers for the quarter, beating analyst expectations and sending its stock soaring in after-hours trading.

The EU said Google had used the mobile operating system to illegally "cement its dominant position" in search. Analysts were expecting revenue of US$25.55 billion, according to data compiled by Bloomberg. Government pressure to improve moderation of user-created content has forced Google to hire more analysts. In all, it's the same trend: it costs more to drive traffic to Google's advertising, and the cost per click is going down. Other revenue - including Cloud, hardware and app sales - is estimated to increase 40 percent. Its enterprise value, or market capitalization and debt minus cash, trades at 13 times expected earnings for the next 12 months, compared with about 14 times for Facebook, 24 times for Twitter and 26 times for Amazon, according to TR data.

A logo is pictured at Google's European Engineering Center in Zurich, Switzerland July 19, 2018. He rates the stock a "buy", with a price target of $1,250 a share.

After subtracting Alphabet's advertising commissions, revenue was $26.2 billion, also exceeding Street forecasts.

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