Alphabet Shares Fall on Earnings Miss for Q3

Google’s parent company, Alphabet, released its earnings report for third quarter 2019 on Monday and the results beat analyst’s top line expectations.  Unfortunately, the report also showed that the technology company missed on earnings per share, and that did not bode quite as well with investors.  

It has been three month since the Google LLC parent excited investors with earnings that were better than had been expected. But this quarter’s profit of $7.07 billion—approximately $10.12 per share—is down 23 percent from one year ago on revenue growth of 20 percent, to $40.5 billion. 

This quarterly profit drop took a hit from a $549 million charge for making accounting changes.  Effectively, Alphabet recorded a gain of $1.38 billion on equity investments a year ago but that was not enough to compensate for the $1.53 billion loss on the same investments in the quarter (ending on September 30).  

All this in mind, analysts had forecast, on average, a much higher profit per share: at a rate of $12.38 per share on $40.32 billion in revenue.  Still, operating income slipped to $9.18 billion which is just shy of the $9.43 billion Wall Street had originally estimated.  4

Alphabet estimates that the shortfall combined with overall higher costs contributed to the initial 2 percent decline in after-hours trading, early this week.  Still, the company did offer a little insight into their outlook.  Google Chief Executive Officer Sundar Pichai commented, “I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube, and Cloud.”  

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