Alphabet Google: Three Financials Factoids

October 28, 2016

The Alphabet Google demonstrated the revenue power of its ad based business. You can dig through the juicy financial report at this link. Three items caught our attention here in Harrod’s Creek.

First, there is an IBM scale stock buy back planned. The amount? $7 billion. In our view, stock buy backs help out management and suggest a lack of imagination in the use of capital. The upsides are popular with the MBA crowd but we like the “keep the share price up” argument.

Second, the company is implementing tactics to offset the shift in click value between desktop search on which Google was built and the newer mobile search model. The approaches are working for now.

Third, the cost cutting yielded some savings in the science club projects. But the company continues to be almost completely dependent on ad revenue.

One can’t argue with the $22 billion in revenue. Alphabet is on its way to $100 billion in revenue powered by advertising, not search, technology, or innovation.

We realize that many Alphabet fans are unaware that Google’s revenue remains an “overture.”

Stephen E Arnold, October 28, 2016


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