Alphabet Inc., Google's parent company, recently released its 2018 fourth-quarter results this week. The numbers that were announced beat investor's expectations for the quarter. Despite the promising results reported by the company, stocks still continue to fall in the extended trading sessions.
According to analysts, Google managed to reach US$12.77 per share, which is higher than the initial US$10.82 prices that it was estimated to reach. The company also raked in around US$39.28 billion in revenue, again higher than consensus estimates of US$38.93 for the quarter.
The recent drop in stock prices can be attributed to the recent decrease in the company's advertising prices. Continued pressures from other companies have also played a part in reducing investor confidence. According to Google insiders, the cost per click on the different Google properties have reduced to 29 percent compared to last year. This has alarmed investors who predict that Google's pricing power may be diminishing.
Google's capital spending also reached more than US$7 billion for the quarter, significantly higher than the US$5.3 billion that was projected. The company also posted a lower operating margin during that quarter. Google currently employs close to 100,000 employees around the world, with most of the new recruits assigned to their cloud segment.
Another significant factor in the loss of investor confidence is the rise of new pressure from other digital advertising agencies. Companies like Amazon have now increased their market presence, putting further pressure on Google to try and increase revenue and reduce costs.
Alphabet's CEO Sundar Pichai acknowledged this problem and mentioned in the earnings call that the scale of the internet and the market itself has become very complex and difficult. However, the company is still determined to provide accurate and trusted information that is easily accessible to everyone.
Aside from its search and online advertising business, Google continues to expand its other business ventures. This includes new cloud business and hardware sales and manufacturing. Google's other ventures are estimated to have contributed around US$6.49 billion for the quarter. Google side-projects, which includes their health venture Verily and their autonomous vehicle startup Waymo, contributed around US$154 million in revenue during the quarter.
Google even boasted that it had recently closed more than 1 million contracts for its Google Cloud Platform service, with now over 5 million paying customers. During the earnings call, Pichai also expressed the company's intent to continue its focus on acquiring new customers, including global 5000 companies.
