Google parent company Alphabet’s big run over the past few months came to a screeching halt today after it came out with its fourth-quarter results, which fell beneath expectations set by Wall Street for the advertising giant — sending the stock down around 5 percent and shaving off billions in market cap.
While Google owns a massive chunk of the advertising system — and it still continues to print money — it’s found itself trying to diversify itself away from that with a series of other big bets on products like hardware and cloud computing. That’s starting to pay off as growth in its “other revenues” and “other bets” continues to rise year-over-year, but there are still a couple of signs that point to a potentially rocky future for Google.
Like other big tech companies reporting this quarter, Google logged a $9.9 billion charge related to changes in U.S. tax law. Here’s the scorecard:
- Revenue: $32.32 billion, compared to $31.87 billion Wall Street estimates, up 24 percent year-over-year
- Earnings: $9.70 per share, compared to estimates of $9.98 per share
- Other revenues: $4.7 billion
- Other bets: $409 million
- TAC as a % of revenue: 24 percent
- YoY paid clicks: 43 percent
- YoY cost-per-click: -14 percent
- QoQ cost-per-click: -6 percent
Google is also naming John Hennessy, who’s been on its board since 2004, as its chair following Eric Schmidt departing in December last year.
In particular, Google’s last quarters have been marked with the creeping shadow of increasing costs for its traffic acquisition as a percentage of Google’s revenue, or TAC. While for the past several quarters it hasn’t raised any massive alarm bells, it could represent a potential problem for Google in the future as more and more activity shifts to mobile devices. It’s something that’s come up a couple of times from analysts poking around at the subject on quarterly calls to discuss the earnings results, and it is still continuing to creep up.
Today is a surprising slip-up for Google, which, while it continues to print money and beat Wall Street’s expectations on the revenue front, found itself tumbling after its fourth-quarter earnings came out. In the past year, Google’s stock has risen nearly 50 percent:
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