Alphabet 4Q Operating Margin Down YOY; Shares Fall
Comment of the Day

February 04 2019

Commentary by Eoin Treacy

Alphabet 4Q Operating Margin Down YOY; Shares Fall

This note by Cara Moffat for Bloomberg may be of interest to subscribers. Here it is in full: 

Alphabet 4Q operating margin +21% compared to +24% YOY.

4Q revenue ex-TAC $31.84 billion, estimate $31.33 billion (range $30.35 billion to $31.81 billion) (Bloomberg data)
4Q paid clicks on Google properties +66%
4Q cost-per-click on Google properties -29%
4Q EPS $12.77
4Q operating income $8.20 billion
4Q capital expenditure $7.08 billion, estimate $5.66 billion (range $4.74 billion to $6.33 billion) (BD)
4Q Google advertising revenue $32.64 billion
4Q Google properties revenues $27.02 billion
4Q Google other revenue $6.49 billion
4Q Other Bets revenue $154 million
4Q other bets operating loss $1.33 billion
Shares down 3.5% post-market

Eoin Treacy's view

When one of the most consistent trends in the world becomes inconsistent, we have no choice but to sit up and pay attention. In the run-up from 2009 Alphabet/Google never pulled back by more than $100. The reactions were all of different durations but the staircase step sequence uptrend was undeniable. Additionally, it paused continually at big round numbers like $600, $800, $1000 and $1200. Investors had come to expect a $100 pullback to be followed by a $200 rally. That sequence ended in 2018 when it pulled back first by $200 and then by $300. That represented a significant loss of consistency for what had been among the most consistent trends in the world.

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