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Alphabet Inc.'s revenue growth is slowing down, but the lack of details about its operations still does not seem to be changing.
The Google parent company
GOOG, + 1.21%
GOOGL, + 1.47%
Monday released results of $ 29.5 billion, after deducting traffic acquisition costs, lower than market expectations. Overall growth in Alphabet sales slowed to 16.7%, or 18.6%, taking into account the TAC, the slowest rate recorded by the online advertising giant since the fourth quarter of 2015.
For a typical business, an investor could explore the different segments and find the companies that contributed the most to the downturn, and then decide if they were afraid enough to sell the stock. Leaders are then asked specific questions about these segments during a teleconference and respond with more information that would be useful for decision making.
The alphabet, however, is not a typical business. It combines all of its advertising revenue – including its massive search activity and its important and influential activity on YouTube – into a single, completely opaque revenue segment that dominates its financial performance. It brings together a computer hardware division, its application store and its Google Cloud business technology arm, three extremely different companies, into a single entity that never separates into its different parts. It groups everything else in "Other Bets", a collection of young companies losing money.
See also: YouTube and Instagram revenue remains obscure to the public.
Future leaders are not fashionable Alphabet. During the company's conference call with analysts on Monday, apology managers attempted to replicate currency fluctuations and changes in advertising products that were never described. There have been some references to the very solid fourth quarter of Alphabet, where the "hard to compare" language is starting to appear. The company is cautiously citing issues related to its Pixel smartphone, due to fierce competition in the premium smartphone market, but few details have also been released.
"The hardware results reflect the decline in Pixel sales compared to last year, reflecting in part a significant promotional activity across the industry as a result of recent market pressures. premium smartphones, "said Ruth Porat, chief financial officer of Alphabet, in a Google statement. .
Google's other revenue was $ 5 billion, up 25% from the previous year, generated by Google Cloud and Google Play Store and "partially offset by hardware". she noted. But we do not know how much each of these companies contributed to the $ 5 billion. An analyst asked investors when investors could search Alphabet for revenue in the cloud or even a higher growth rate. The leaders said they would share more information at the "right time".
Not to be missed: the tech giants have earned so much money in 2018 that 2019 will surely look very bad
Another analyst asked Alphabet to consider leaving the hardware sector, noting that he "feared for some not following a too strong trajectory" and compared Google's efforts in terms of hardware to those of Microsoft. Sundar Pichai, general manager of Google, would only say that Google's commitment to hardware is' very strong ', so that' the company's services are presented to users the way we thought ".
YouTube, YouTube, is a service that transcends the company's top advertising and research concerns. Alphabet still does not report YouTube as a separate company generating its own revenue, although some analysts estimate that its revenues exceeded $ 13 billion last year. Porat even noted in his remarks that "in terms of dollar growth, the results were again driven by mobile search, with a strong contribution from YouTube, followed by computer-based research."
A "significant contribution" would seem to be a reason for providing more details to investors, as suggested by the Securities and Exchange Commission last year before finally giving way.
Alphabet's results reporting and conference calls appear to be increasingly out of date each quarter. Investors are struggling to accept this kind of wall when the numbers are good, but Alphabet shares fell, then a little more Monday afternoon, ending the extended session by more than 7%.
Investors need to be concerned about the slowdown in Alphabet's growth and whether this is the beginning of a new growth rate below Google's usual 20% growth for almost four years. But they should not expect the Alphabet management to provide insight.
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