Alphabet Experiences Low First Quarter; Google Remains Optimistic

Alphabet Inc., an international conglomerate company that was created in 2015 to serve as Google’s parent company, saw its stock fall 6% this quarter in after-hours trading.

Analysts projected the revenue to be about $120 million, more than the $20.2 billion that was generated and the earnings per share estimate was at $7.96 when in reality it came in at $7.50.

Although Google may be disappointed with the low first-quarter, they strongly believe that there is nothing to worry about.

“There’s nothing wrong with this company,” Colin Gillis of BGC Partners told the New York Times. “They spent a bit more and took in a bit less than we thought, so Mr. Market is having a mood swing. But it was a fine quarter.”

CIO-Today reports that just because Alphabet didn’t exceed analyst expectations, investors backtracked and shares fell by about $46.

Google generates nearly all of its profits from its core Google search and advertising business. Google’s revenue from “Other Bets” was about $166 million, which is more than two times what it was in the first quarter of 2015.

Google is still doing very well, and they are in the middle of a transition from desktop ads to mobile ads. Just last quarter, aggregate cost per click fell 9% from the previous year.

Just two years ago in 2014, Google accounted for about 40% of all digital advertisement spending in the United States. They don’t seem to be worried about a less-than-perfect first quarter for Alphabet. Over the last year, the number of employees went up from 55,000 to 64,000, and the amount of cash on hand went up $10 billion to $75 billion.

Google is doing just fine, but investors are curious as to whether or not they will make a strong push in the cloud computing industry. “This is their third try to really become a cloud powerhouse,” John R. Rymer, an analyst at Forrester Research, said. “They certainly seem more serious this time, but we’ll have to see if they move beyond digital natives to airlines, utilities, trucking companies, governments – the enterprises where the real money is.”

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