Alphabet: Google mother replaces Apple as the most valuable company

Alphabet has been propelled to “world’s most valuable company” status thanks to profit of $23.42 billion (about £16.39b, AU$33.07b) in 2015, after a revenue of $74.54 billion (about £52.18b, AU$105.3b). These include things like smart thermostat company Nest and innovation incubator Google X.

Shares of Alphabet popped after hours, unseating Apple Inc. for the moment as the world’s most valuable company.

“This makes Alphabet an even stronger bellwether for investors to watch”, Scott Fullman, chief strategist at Revere Securities Corp, said after the earnings report came out.

That means that Alphabet is now worth around $568bn, compared with Apple, which has a value of $535bn.

Still, investors rallied behind Alphabet’s stock thanks to the strength of search. Analysts had expected $20.77 billion, according to Thomson Reuters I/B/E/S. If not for employee stock expenses and certain other items, Alphabet said it would have earned $8.67 per share.

The earnings release spelled out the cost of running mostly experimental businesses that aim to do everything from eliminating the human driver to curing cancer. It would have reported earnings of $6 billion if not for the restructuring, and a $3.6 billion loss from Alphabet’s “Other Bets” businesses. The company said that its net income for Q4 2015 was $4.9bn, that’s up from $200m for the same period in the previous year.

The title of most value company in the United States has been passed between technology companies for several decades.

Alphabet also reported that Google’s Gmail has surpassed a billion users, the seventh Google property to reach this awesome milestone. Google websites generated $14.9 billion, Google Network Members’ websites $4.1 billion, Google advertising revenues $19.1 billion and Google other revenues $2.1 billion. The company’s opaque accounting made it hard to know just how much profit Google reaped from its primary business – selling digital ads next to everything from search results to YouTube videos.

Sales at those “other bets” were paltry – just $448 million during 2015, driven mostly by Next and Google Fiber. But with the Google side of Alphabet doing so very well, it doesn’t really matter.

The two companies’ operating systems and apps are in direct competition with each other and Apple is still in litigation with Samsung Electronics (005930.KS), the biggest Android smartphone maker.