Google parent hit by higher costs, names new chairman

Breaking News February 02, 2018 06:39

By Agence France-Presse
San Francisco

Google parent company Alphabet on Thursday reported a quarterly loss to set aside funds to pay taxes on repatriated profits, and named a new chairman to replace outgoing Eric Schmidt.



Shares in Alphabet slid 2.7 percent in after-hours trade on the results, highlighting concerns about rising costs for the online giant and profits weaker than expected.

Alphabet reported a loss of $3 billion for the fourth quarter as it set aside $11 billion for taxes. An estimated $9.9 billion was for taxes on repatriated earnings.

The California tech giant said revenues in the last three months of 2017 rose 24 percent from a year ago to $32.3 billion and cited "great growth" for the company.

The company used the earnings report to announce it had named board member and former Stanford University president John Hennessy as chairman, replacing Schmidt, who announced his departure in December.

Hennessy has been a board member since 2004 and lead independent director since April 2007.

In the earnings report, Google remained the key driver of revenue and profit for the company, which has reorganized into new divisions for self-driving vehicles, life sciences and other so-called "moonshot" projects.

The Google segment accounted for $31.9 billion in revenue and delivered an operating profit of $8.8 billion.

Excluding the tax provision -- following the lead of other multinationals taking advantage of a favorable rate to repatriate earnings -- Alphabet would have posted a profit of $6.8 billion.

"Our momentum reflects a relentless focus on users, advertisers and enterprise customers, as well as the benefits of our commitment to long-term investing," chief financial officer Ruth Porat said.

Porat said Alphabet was pleased with the progress of its "other bets," which include the life sciences unit Verily and a new cybersecurity division called Chronicle.

Alphabet's "other bets" category delivered revenue of $409 million, up from $262 million a year earlier. The loss from those projects narrowed to $916 million from $1.1 billion.

Google CEO Sundar Pichai said he expects more diversification from the unit, which has relied on the internet search engine and its related advertising revenues.

"As we've consistently emphasized, alongside the continued momentum in our advertising business, we are focused on building a second wave of growth within Google over the medium and long-term, which includes the rapidly growing revenue businesses in Google, cloud, hardware and YouTube," Pichai told a conference call.

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