If you think about advertising and the dollars that are allocated by firms around the world, the number one place they send those dollars to is Alphabet or Google. Google generates more revenue from internet advertising than any company globally and advertising revenue accounts for 81% of the the $56.698 billion in the 4th quarter sales.
In an article by Paresh Dave and Munsif Vengattil of Reuters, chief executive officer Sundar Pichai updated the company’s 4th quarter performance. If you think about the pandemic and the biggest advertiser deal with travel and entertainment, but in many areas they were very limited as restaurants closed, people were encouraged to stay home. In that environment, Google’s sales rose 23% from last year. The retailers who were driven online made up the difference, because once you have an online ability, you need to tell the world that you exist and people can buy from your site.
Analysts were expecting an increase of 15.31% or $53.129 billion, but Alphabet made $56.698 billion.
The company is not perfect, similar to Microsoft and Amazon, Google is on the cloud, unlike the other companies, Alphabet is losing money, they lost $1.24 billion in the quarter. Cloud sales were $3.831 billion for the quarter or $13.059 billion for the year which meant an increase of revenues of 46%. The loss over the year increase 21% to $5.6 billion.
Overall, the company’s quarterly profit rose 43% to $15.2 billion or $22.30 a share, compared with the estimated $10.895 billion or $15.95 a share. Revenue which has been consistently growing at 20% a year decreased to a still healthy 12.8%.
Linking to dividend paying stocks, when you look at Alphabet it makes its money through advertising through search engine,YouTube and the cloud and one expects in 2021 as the economy opens across the country and the world the travel and entertainment sectors will be spending money on advertising. Much of it will come through the Alphabet company. When you examine your investments you should see core holdings of where revenue will be made through any cycle and hope for the future, because every company can execute better.
There are more questions than answers, till the next time – to raising questions.