Google earnings soar thanks to the bets on Android, cloud and hardware

Google earnings soar thanks to the bets on Android, cloud and hardware
Google's parent company, Alphabet, took its turn to report earnings for the quarter ending in June, and, fittingly enough, it did outrun analyst expectations. While not as stellar as Apple ($7.81 billion) or Samsung ($5.2), it did beat Microsoft ($3.1) and Facebook ($2.1) comfortably with $4.88 in net profit on $21.5 billion revenue, which is an increase of 21% over the Q2 2015 revenue.

Here we have to open a bracket and note that Alphabet is engaged in a lot of so-called "moon shot" projects like self-driving cars, which do cost dearly in the short term ($859 million operational loss there in Q2), but may pay off handsomely in the longer run. 

Some analysts argue that this is exactly how a company should be run, instead of simply focusing on cost-cutting or temporary measures to boost profits quarter-to-quarter. Others would like to see Alphabet get more down-to-earth, and commercialize its projects more, like it did with Google Fiber.

We'd argue against the former, as Google has already proven it can make its "moon shots" work over the long run, like its full bet on mobile with the creation of the Android platform, which was the highlight of this past quarter. Ad clicks increase was the whopping 29%, and a lot of that came from mobile phones, plus the price of mobile ads is beginning to rise, too. 

Moreover, Alphabet's non-advertising revenue increase was even higher at 33%, propelled by cloud storage, hardware sales, and Play Store revenues. While still a fraction from the core ad business revenue, it shows a growing amount of diversification at Alphabet, which was pleasing enough for investors to push the stock higher in after-hour trading.

source: WSJ

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13 Comments

1. Amroze

Posts: 597; Member since: Jul 04, 2016

Apple is a trend, won't last long.

2. shaineql

Posts: 522; Member since: Apr 28, 2014

If Samsung plays the VR and Flexible display/smartphone card right they will be out fast. The same way apple killed nokia.

3. meanestgenius

Posts: 21742; Member since: May 28, 2014

Apple didn't kill Nokia. Elop killed Nokia. Microsoft buried the corpse. But if their Android handsets are good enough, they'll be on the rise once more.

4. Amroze

Posts: 597; Member since: Jul 04, 2016

POS evil Elop.

5. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Google smashes expectations and moves up 5-10% in stock price. Apple barely beats out low end expectations and stock goes up 10%. The fanboy bias for Apple really knows no bounds.

6. IAMBLCKJ3ZUS

Posts: 401; Member since: Sep 29, 2015

Besides the life changing surface phone the Nexus is the only Android phone worth having and Samsung.

10. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

I didn't know the life changing surface phone ran Android.

7. sonisoe

Posts: 440; Member since: May 06, 2009

being a "software/service" company that generates (ad) revenue, google outperforms any company on earth.....

8. kiko007

Posts: 7493; Member since: Feb 17, 2016

Have you seen Apple's revenue the past several quarters? Google outperforms "most" companies on Earth. FTFY

9. mrochester

Posts: 972; Member since: Aug 17, 2014

It's amazing that Google makes so much money from something (adverts) that are so universally hated by everyone. I wonder when the penny is going to drop in the industry that advertising is pretty ineffective?

11. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

How do you think network TV has been paid for all these years? And the drop in ratings for network programming isn't because of ads, it's because of content. But hey, I'm sure you'd rather everyone go to a pay-for everything system, rather than trade a bit of time to access it for free. Let's have every website, every video, every single thing on the internet that currently uses ads to switch to a pay-for system. I guarantee you, people would be screaming for ads to come back.

13. jroc74

Posts: 6023; Member since: Dec 30, 2010

"How do you think network TV has been paid for all these years?" Exactly. Not only TV but local radio stations too.

12. jroc74

Posts: 6023; Member since: Dec 30, 2010

The difference is the way Google does ads. They did it with text when many companies thought it was smart to bombard ppl with picture ads. Tex is waaay easier on system, internet security, browser resources. Amazing that something so simple can make them so much money.

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