Google parent Alphabet missed Wall Street estimates on its third-quarter results tonight, having failed to live up to expectations on profit takings.
Alphabet reported earnings per share of $10.12 for the three months to the end of September and net income of $7.07bn, versus expectations of $12.44 per share according to consensus estimates polled by Refinitiv. In the same period in 2018, it posted earnings of $13.06 per share and income of $9.19bn.
Shares in the firm fell more than four per cent in after-hours trading, having closed up almost two per cent as investors awaited the filings.
The search giant slightly topped forecasts on revenue, jumping 20 per cent to reach $40.5bn against analysts’ estimates of $40.3bn.
Traffic acquisition costs, which account for how much Alphabet spends on attracting users through deals with companies such as Apple to make Google its default browser, hit $7.49bn. This narrowly beat estimates of $7.48bn, according to Factset.
Google’s so-called other revenue category, which includes sales from hardware such as its Pixel smartphones and its cloud services division, came in at $6.43bn, surpassing expectations of $6.32bn. It marked a rise of 39 per cent compared to the $4.64bn in the same period last year, and four per cent from last quarter’s $6.18bn.
The results followed reports from Reuters earlier in the day that Google is in talks to buy fitness tracking tech firm Fitbit, in a potential plan to expand into the wearables market. Fitbit shares spiked as much as 30 per cent on the news, with trading being temporarily halted at one point to contain excitement around the deal.
Alphabet said revenue from its secretive other bets division, which includes subsidiaries other than Google such as its driverless tech startup Waymo, came in at $155bn, up from $146m a year earlier.
Google itself has had a tumultuous year, particularly in the area of anti-competitive behaviour. The tech giant was forced to pay up €1.5bn by the European Commission in March, and has since been at the centre of a major investigation by 50 state attorneys general in the US.
Its own employees have staged multiple walkouts in protest at the company’s policies, shedding light on the company’s alleged unfair pay practices.
It recently said it had achieved so-called quantum supremacy, having developed a computer that could perform calculations far beyond the abilities of current supercomputers. Rivals have cast doubt on the tech firm’s claims, with IBM stating Google’s “indefensible” assertions of its success were exaggerated.
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