Google parent tops Apple as world's most valuable company

SAN FRANCISCO -- Alphabet now comes before Apple atop the list of the world's most valuable companies.

The shift occurred in Monday's extended trading after Alphabet, Google's new parent company, released a fourth-quarter earnings report that highlighted the robust growth of the digital ad market.

See Full Article

Apple Inc.'s iPhone, meanwhile, is suffering its first downturn since it debuted eight years ago.

Alphabet Inc. earned $4.9 billion on revenue of $21.3 billion in the fourth quarter. If not for employee stock expenses and certain other items, Alphabet said it would have earned $8.67 per share. That figure easily topped the average estimate of $8.10 per share among analysts surveyed by FactSet.

The report provided the most detailed breakdown yet on the profits pouring in from Google's dominant search engine and ad network. (Google reorganized itself under Alphabet last October.) Investors pushed up Alphabet stock $36.88, or nearly 5 per cent, to $807.65 in extended trading.

Based on that after-hours bump, Alphabet's market value stood at $555 billion while Apple's was at $534 billion, based on the most recent regulatory filings showing the company's outstanding shares. The rankings could quickly change again in regular trading Tuesday.

Apple's stock has been sliding amid concerns over slowing iPhone sales. Meanwhile, Alphabet's stock has surged by 45 per cent since the end of 2014 when it was still trading under Google's name.

The fourth-quarter report marks the first time Alphabet has spelled out the costs of running still-experimental businesses that are trying to do everything from eliminating human drivers to curing cancer.

Until now, Google chose to hide the expense of running those peripheral operations in its financial statement. The company's opaque accounting made it difficult to know just how much profit Google reaped from its primary business -- selling digital ads next to everything from search results to YouTube videos.

In the fourth quarter, Google produced an operating profit of $6.8 billion on revenue of $17.1 billion, after subtracting ad commissions. That translates into a whopping profit margin of 40 per cent. Apple registered an operating profit margin of 32 per cent in its most recent quarter.

Meanwhile, Alphabet's other companies together produced an operating loss of $1.2 billion on revenue of just $151 million. Alphabet labels that category "other bets." For the full year, Alphabet's other companies lost $3.6 billion on revenue of $448 million.

The optimism surrounding Alphabet stems in part from hopes that the company is developing more financial discipline as it discloses more earnings details. Google had become known for its free-spending habits and reluctance to share information with analysts.

The change in sentiment coincided with Google's hiring of a new chief financial officer, Ruth Porat, last May. Porat, a Wall Street veteran, has consistently signalled her intent to rein in spending.

Under the previous setup at Google, "things had always been a little muddy," said Edward Jones analyst Josh Olson. "The hope now is that management will continue to show greater cost discipline."

Google is also counting on advertisers to gradually pay more for marketing messages on smartphones. They still aren't paying as much for mobile ads as on personal computers because ads on smaller smartphone screens strike many as less valuable. That's one reason Google's average ad rates, measured as "cost per click," have been declining for more than four years.

In the latest quarter, Google's cost per click fell by 13 per cent from the same time in 2014. But Porat cited in increase in mobile search requests as one of biggest reasons that Google's revenue rose by 18 per cent from the previous year. As people increasingly search for information and shop on their phones, the company expects advertisers to ramp up their spending on smartphones, too.



Advertisements

Latest Economic News

  • CRA's new Postal Code Project targeting richest homeowners

    Economic CTV News
    With the release of the Panama and Paradise Papers, the headlines have been filled with world celebrities engaging in offshore tax evasion. But Canada has its own problem with tax evaders who engage in “creative bookkeeping,” which is why the Canada Revenue Agency has launched a new initiative to crack down. Source
  • CanniMed seeks regulatory action against Aurora's hostile takeover bid

    Economic CTV News
    SASKATOON -- CanniMed Therapeutics says it is seeking regulatory action in both Saskatchewan and Ontario in its latest push back against Aurora Cannabis' hostile takeover bid. The Saskatoon-based medical marijuana producer (TSX:CMED) says it has applied to securities regulators in both provinces for several orders, including that Aurora's hostile offer be considered an "insider bid," and be treated as such. Source
  • As bitcoin soars, warnings of a bubble proliferate

    Economic CTV News
    Is bitcoin in a bubble? The price of bitcoin has been soaring this year, and last week alone it jumped from $11,000 to well over $17,000, according to Coindesk. It started the year below $1,000. Source
  • Swiss group says it's out of the running for Montreal's Just For Laughs

    Economic CTV News
    MONTREAL - Swiss-based GF Productions says it's out of the running in the ongoing bidding for Just For Laughs. The company behind the Montreux Comedy Festival says it has signed a confidentiality agreement with the financial institution mandated to deal with the sale of Montreal entertainment company and will let it know they are bowing out. Source
  • Fraudsters scammed at least $1.7M out of Canadians with cryptocurrencies this year

    Economic CBC News
    Canadians have been swindled out of than $1.7 million via scams involving cryptocurrencies such as bitcoin so far this year — more than double the amount during all of 2016. The Canadian Anti-Fraud Centre says that's more than five times the amount people lost to these types of scams in 2015, which was roughly $284,000. Source
  • CEO offers to take Canadian Solar private in cash deal

    Economic CTV News
    GUELPH, Ont. -- Canadian Solar Inc. revealed Monday it has received a non-binding takeover offer from its chairman, Shawn (Xiaohua) Qu, who is also CEO and president of the Ontario-based company. Qu is tentatively offering US$18.47 in cash for each share not already owned by him and his wife Hanbing Zhang, who have about 23.5 per cent of Canadian Solar's stock. Source
  • Pattie Lovett-Reid: It's time to set your financial resolutions for 2018

    Economic CTV News
    We are on the cusp of a new year and it’s the perfect time to set your financial resolutions for 2018. Here, I try to walk the talk. Every year during the holiday period we review our net worth statement. Source
  • Bitcoin's move to mainstream carries new financial risks: Don Pittis

    Economic CBC News
    Investing often descends into a kind of immoderate zeal, but there are signs the digital currency craze has the potential to threaten the wider global economy if left unchecked. Just as we've seen with the current passion for bitcoin, part of that single-minded enthusiasm includes the fierce rejection of criticism. Source
  • Canadian financial companies investing in overseas coal plants despite push against

    Economic CTV News
    OTTAWA - Canada's national pension fund manager is among a group of Canadian companies that are undermining the federal government's international anti-coal alliance by investing in new coal power plants overseas, an environmental organization says. Source
  • Canadians swindled out of $1.7M via cryptocurrency scams this year

    Economic CTV News
    TORONTO - Canadians have been swindled out of than $1.7 million via scams involving cryptocurrencies such as bitcoin so far this year - more than double the amount during all of 2016. The Canadian Anti-Fraud Centre says that's more than five times the amount people lost to these types of scams in 2015, which was roughly $284,000. Source