Google Parent Alphabet Falls on Revenue Deceleration in 1st Quarter

Company reports growth slowdown in paid-clicks and advertising revenues Read More...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="- By James Li

” data-reactid=”11″>- By James Li

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Alphabet Inc. (GOOG)(GOOGL), the parent company of well-known search engine Google, said first-quarter revenues increased 17% year over year, down from 26% revenue growth in the prior-year quarter.” data-reactid=”12″>Alphabet Inc. (GOOG)(GOOGL), the parent company of well-known search engine Google, said first-quarter revenues increased 17% year over year, down from 26% revenue growth in the prior-year quarter.

For the quarter ending March 31, the Mountain View, California-based company reported net income of $6.657 billion, or $9.50 in earnings per share, compared to net income of $9.4 billion, or earnings of $13.33 per share, in the prior-year quarter. The company recorded a $1.7 billion operating expense charge for the quarter in light of the European Commission’s decision that certain parts of Google’s contractual provisions with AdSense for Search partners infringed European competition law.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Company reports decelerating revenues in key businesses” data-reactid=”20″>Company reports decelerating revenues in key businesses

Chief Financial Officer Ruth Porat said during the earnings call that although Google mobile search and YouTube continue driving company site revenues, hardware revenues declined due to lower sales in premium smartphones. Advertising revenues of $30.72 billion increased 15.3%, down from 24.4% growth in first-quarter 2018.

Porat said during the question-and-answer section that the timing of product changes in YouTube advertisements can affect year-over-year growth. Paid-clicks on Google properties increased 39% year over year, down from 59% growth in the prior-year quarter. Further, paid-clicks on Google properties declined 9% from fourth-quarter 2018.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Company remains overvalued despite post-market tumble” data-reactid=”36″>Company remains overvalued despite post-market tumble

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Class A shares of Alphabet closed at $1,296.20, while Class C shares closed at $1,287.58. Although shares tumbled over 7% in post-market trading, the company is still trading above its 10-year median price-sales valuation.” data-reactid=”37″>Class A shares of Alphabet closed at $1,296.20, while Class C shares closed at $1,287.58. Although shares tumbled over 7% in post-market trading, the company is still trading above its 10-year median price-sales valuation.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="GuruFocus ranks Alphabet's financial strength and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage of 275.37, a strong Piotroski F-score of 7 and operating margins that are outperforming 85% of global competitors. Additionally, the company’s business predictability ranks 3.5 stars out of five on consistent revenue and earnings growth over the past 10 years.” data-reactid=”51″>GuruFocus ranks Alphabet’s financial strength and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage of 275.37, a strong Piotroski F-score of 7 and operating margins that are outperforming 85% of global competitors. Additionally, the company’s business predictability ranks 3.5 stars out of five on consistent revenue and earnings growth over the past 10 years.