Alphabet posts strong revenue on video market, stock surges

Google parent Alphabet said Thursday its second quarter profit jumped 43 percent from past year to $4.9 billion, in results that lifted shares of the internet giant.

Analysts had predicted revenue of $20.8 billion for the second quarter of 2016. Advertisers typically pay less for user clicks on mobile ads than on desktop ads, Google’s traditional strength, but the strong earnings performance suggest that is beginning to change, he said.

Chief financial officer Ruth Porat called the results “terrific” and said they “reflect the successful investments we’ve made over many years in rapidly expanding areas such as mobile and video”.

Sundar Pichai, now Google CEO, in 2013.

“Video is a huge component of digital content, and YouTube continues to shine”, he said.

The rise of Google/Alphabet, which is vying with Apple to be the world’s most valuable company, has coincided with a steep decline for Yahoo, which this week announced a sale of its core operations to Verizon for $4.8 billion, a far cry from Alphabet’s market value of more than $500 billion.

Alphabet, which dominates the mobile ad market along with rival Facebook Inc, has been trying to beef up ad revenue from mobile and video businesses, both of which till past year were a little less profitable than its desktop business.

Mobile, he said, “has transformed the way that people consume information and Google’s products have become an essential and much loved part of the experience”. In the second quarter of 2015, the Other Bets lost $660 million, with revenue of $74 million.

Alphabet subsidiaries include Google, Nest Labs, and Google X labs devoted to big-vision new technologies such as self-driving cars.

“I’ve commented many times that our focus on long-term revenue growth does not give us a pass on managing expenses”, she told investors.

Alphabet said it earned $4.8 billion, or $7 a share, in the quarter, compared with $3.9 billion, or $6.43 a share, in the year-ago period. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $8.07 per share.