Alphabet reported fourth quarter net income of $8.95 billion, or $12.77 a share, compared with losses of $3.02 billion, or $4.35 a share, in the year-ago period.
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Changes to the U.S. tax code resulted in a $9.9 billion expense in the fourth quarter of 2017. Adjusted for the tax costs, Alphabet logged earnings of $9.70 a share.
Alphabet’s bottom line benefited from a $1.3 billion unrealized gain from a non-marketable debt security in held.
Without that benefit, Alphabet earnings were $10.91 a share, just above the FactSet consensus estimate of $10.86 a share. The company has started reporting gains and losses in outside investments under new accounting rules that took effect last year.
Overall Alphabet revenue rose to $39.28 billion from $32.32 billion in the year-ago period
The vast majority of Alphabet’s sales are from Google and its various advertising units, which brought in $32.64 billion in the fourth quarter.
Traffic acquisition costs the fees Alphabet pays other companies to keep Google as the default search engine rose to $7.44 billion from $6.45 billion in the year-earlier quarter. However, traffic acquisition costs declined to 23% of total ad revenue from 24% in the year-ago quarter.
The company’s non-advertising businesses captured in the “other revenues†segment — which includes the Play Store, cloud computing and the company’s hardware sales — brought in $6.49 billion. Alphabet does not disclose how much each of the segments within “other revenues†contributes, but the company did say a year ago that its cloud unit brought in $1 billion for the fourth quarter.
Alphabet’s “other bets†unit, where it runs experimental businesses, lost $1.33 billion on sales of $154 million.
In the fourth quarter, Alphabet used $6.85 billion for Google’s capital expenditures, up from $3.81 billion in the year-earlier period. Overall in 2018, Google’s capital expenditures nearly doubled to $25.46 billion. The company’s operating margin also slimmed to 21% from 24% in the year-ago period. ■