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Alphabet shares fall amid disappointing Google report

By Yana Berman

Google misses targets on sales, while YouTube and Google Cloud are also lower than expected

AP Photo/Mark Lennihan AP Photo/Mark Lennihan

shares fell almost five per cent in early trading after Google published its Q4 report and fiscal year 2019 results.

Google's revenue in 2019 missed expectations, hitting $46.08 (£35.5bn, €41.6bn) versus the $46.94bn forecast by consensus estimates compiled by Refinitiv. Revenue is up 17 per cent up year-on-year.

Earnings per share comprised $15.35 per share, which was ahead of estimates.

The company's sales grew more slowly than expected, diving below 20 per cent in three of four quarters during 2019. Such a result was registered just once in the previous three years.

Meanwhile, YouTube generated $15.15bn in ad revenue throughout the year, which is far below the estimates of $25bn. The result is compared with $11.16bn generated by the segment in 2018.

YouTube TV ended the year with 2 million paid subscribers, earning $3bn in subscriptions and other non-ad revenue. This was the first time the company had disclosed YouTube revenue.

The company's cloud business, Google Cloud, generated $8.92 bn in revenue in 2019 in comparison to $5.84bn in 2018. Although the segments' annual run rate was up 53 per cent from last year, according to Alphabet CEO Sundar Pichai, Google Cloud still grew much slower than Microsoft Corp’s Azure. It is worth noting that the latter has recently reported a 62 per cent quarterly rise in sales.

According to the analysts cited by Reuters, the results for various Google businesses are underwhelming. The areas that were expected to be on the rise missed the expectations, although Google search is accelerating faster than feared.

Google's dominance on the ads market has been subject to various probes in the US and EU. France has recently fined Google €150m for abusing its position.

In 2019, Google ad sales during the holiday shopping quarter were $37.93bn, an increase of 16.7 per cent in comparison to the same period last year.

FURTHER READING: France fines Google €150m for abusing its dominant position

FURTHER READING: US antitrust probe against Google will expand into search and Android

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