Google's parent company Alphabet beats on earnings, brings in $27.77 billion in Q3

• Steve Kovach
 

• Oct. 26, 2017, 3:50 PM
• 16,479
 

Google CEO Sundar Pichai. Justin Sullivan / Getty Staff

• Google beat expectations on Q3 results, sending the stock popping after hours.
• The company generated $27.77 billion in revenue, up 24% from a year ago.
• Despite controversies like fake Russian ads and fake news, the company continues to out perform

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Google's parent company Alphabet topped Wall Street's Q3 financial targets, as its mobile search advertising business and YouTube video site pushed revenue up 24% from the year before. 

Shares of Alphabet were up as much 4% in after hours trading on Thursday, following the announcement. 

Thursday afternoon was tech earnings mania with Amazon, Alphabet, Intel and Microsoft all reporting earnings. All of them beat expectations across the board.

• Amazon boosted its revenue by 34% year-over-year, blowing past Wall Street targets.
• Intel beat analyst expectations in its third-quarter earnings report with revenues up 2% from the same quarter last year.
• Microsoft's fiscal first quarter earnings beat Wall Street expectation on both the top and bottom lines. Shares in the company, which reported its results after the closing bell on Thursday, inched up almost 4% to about $81.75 in after-hours trading.

Alphabet executives pointed to strength in its online ad business across regions of the world during the third quarter, and highlighted new initiatives like Google's fledgling line up of hardware products and Google's cloud computing business.

"You're clearly entering an era where you're going to have different types of computing experiences," Google CEO Sundar Pichai said during the conference call with analysts. "So to do that and to stitch it all together across, I think it's important that we thoughtfully put our opinion forward."

A warning about a rising cost

But Google executives also warned that payments to partner websites would continue to grow, as consumers increasingly access Google's services on mobile devices like smartphones.

Concerns about Google's so-called TAC, or traffic acquisition costs, were on display during Thursday's conference call, as several analysts queried Google execs about the Q3 increase (now 23% of ad revenue versus 21% in the year ago period). But CFO Ruth Porat declined to provide more details about the increase, other than to ascribe it to the shift to mobile and to "changing partner agreements"

Here are the results, versus analyst expectations from Bloomberg and Thomson Reuters:

• Revenue: $27.77 billion vs. $27.2 billion expected (up 24% year-over-year)
• EPS (GAAP):  $9.57 vs. $8.34 expected
• Traffic acquisition costs, which Google pays to partners, was up for the quarter with $3.1 billion spent versus $2.62 billion last year.
• Cost-per-click on Google properties was down 21% from the year-ago quarter.
• Operating loss for Other Bets, which includes other Alphabet companies like X, Nest, and Waymo, was $812 million.
• Google's Other revenues, which includes hardware and cloud services, was $3.4 billion, up from $2.43 billion a year ago.
• Headcount was up to 78,101, versus 69,953 for the same quarter last year. 

Alphabet executives said the biggest growth in headcount was in Google's cloud business, as the company bulks up on technical and sales roles.

The big story surrounding Google is the fake ads from Russian bots that ran across various Google platforms during the 2016 US election. Google has discovered less than $100,000 worth of ads so far. Kent Walker, Google's general counsel, will testify before Congress with representatives from Facebook and Twitter regarding Russian abuse on their platforms on November 1.

Despite the fake news problems and Russian ad abuse, Alphabet's stock has been performing well. It hit an all-time high of $1,016 last week, and the company was able to report a healthy earnings beat Thursday.

Get the latest Google stock price here.

SEE ALSO: The story behind Google's hardware ambitions

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Amazon's stock skyrockets toward $1,040 on strong earnings

• Julie Bort
 
•   

• Oct. 26, 2017, 3:45 PM
• 43,267
 

Amazon CEO Jeff Bezos.David Ryder/Getty

AMZN Amazon.Com

 1,115.84 13.19 (+1.20 %)

DisclaimerGet real-time AMZN charts here »

Thursday afternoon was tech earnings mania with Amazon, Alphabet, Intel, and Microsoft all both reporting earnings and beating expectations across the board.

• Google's parent company Alphabet beat expectations on third-quarter results, sending the stock popping after-hours. The company generated $27.77 billion in revenue, up 24% from a year ago.
• Intel beat analyst expectations in its third-quarter earnings report with revenue up 2% from the same quarter last year.
• Microsoft's fiscal first-quarter earnings beat Wall Street expectations on both the top and bottom lines. Shares in the company, which reported its results after the closing bell Thursday, inched up by almost 4% to about $81.75 in after-hours trading.

Amazon also just released its third-quarter earnings report. It reported:

• Revenue: Q3 2017 revenue of $43.7 billion, versus $42.19 billion expected. So that's a beat.
• Earnings: $0.52 a share versus $0.52 last year.

Amazon's revenue jumped 34% over the year-ago quarter. Investors are happy. Amazon's stock has jumped 7% in after-hours trading to about $1,037 a share.

That's better news than it saw in the second quarter, when the company missed Wall Street's expectations and its stock dropped. The e-commerce giant is ramping up investments in warehouses, content for its Prime Video streaming service, and investments in international markets and in groceries, following its $13.7 billion acquisition of Whole Foods earlier this year.

Amazon's all-important cloud-computing unit, Amazon Web Services, reported $4.6 billion in revenue, up from $3.2 billion last year. Wall Street has been concerned about slowing growth with AWS, but it's still growing well.

For its fourth quarter, a major one that includes the holiday shopping season, Amazon predicts net sales of $56 billion to $60.5 billion. So that's growth of 28% to 38% compared with the fourth quarter of 2016.

That forecast includes the impact from its acquisition of Whole Foods, and it also includes a favorable foreign-exchange rate. Operating income is expected to be anywhere from $300 million to $1.65 billion, compared with $1.3 billion in the fourth quarter of 2016.

Here's the full press release.

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SEE ALSO: Microsoft and Amazon struck a brilliant partnership to take on Google in the next big thing for cloud computing

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Bitcoin hit a new record high of over $6,300

• Oscar Williams-Grut
 

• 7h
• 1,774

A mock-up of a bitcoin featuring the digital currency's logo. REUTERS/Dado Ruvic

• Bitcoin posted new record high of $6,306 on Sunday evening.
• Price has since pulled back and is around $6,111 on Monday morning.
• The cryptocurrency has rallied around 5,000% so far this year.

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Bitcoin posted a new record high on Sunday evening, before pulling back.

The digital currency rallied against the dollar to hit a high of $6,306.58 on Sunday evening. That surpasses bitcoin's previous high of $6,150, recorded earlier in the month.

Bitcoin has pulled back slightly on Monday morning and is trading at $6,111.14 as of 7.35 a.m. BST (2.35 a.m. ET).Markets Insider

The exact causes of the weekend's record-breaking rally aren't clear. Bitcoin was falling most of the last week after a so-called "hard fork", which split the underlying software of the currency to create a new cryptocurrency. Momentum only really turned around on Sunday.

Bitcoin has been on an absolute tear in 2017, rising over 500% against the dollar so far this year. The price rise has been driven by increasing mainstream adoption and awareness of bitcoin and cryptocurrencies more generally. At least 55 cryptocurrency hedge funds have sprung up this year, many of them focusing on bitcoin.

Last week, renown Silicon Valley investor Peter Thiel said people are "underestimating bitcoin."

Investors are running out of cash — and that's terrible news for the stock market

• Joe Ciolli
 

• Oct. 29, 2017, 6:01 AM
• 27,055
 

AP

• A growing number of firms are sounding the alarm on investor cash levels that have dropped near the lowest levels in history.
• Low cash levels are a threat to the ongoing equity bull rally, because it signals that investors are running out of money they can use to keep the market going higher.

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The stock market has a cash problem.

As in, investors are running out of it, and the shortage could threaten the 8 1/2-year equity bull market that we've come to know and love.

It's a new reality facing investors of all types. While money market assets make up a record-low 17% of long-term funds, the cash balance of equity mutual funds also sits at an all-time low of 3.3%, according to data compiled by INTL FCStone.

And the firm doesn't mince words when discussing the increasingly dire situation.

"A decade of financial repression has turned cash into trash," the firm's macro strategist Vincent Deluard wrote in a recent client note. "There are a lot of fully-invested bears out there. There is not much sidelines cash left to push stocks higher." Both money market and mutual fund cash levels are at an all-time low.INTL FCStone / ICI

Some of the market's very biggest lenders have also highlighted dwindling investor capital. On Morgan Stanley's earnings call on October 17, chief financial officer Jonathan Pruzan said that "we've seen cash in our clients' accounts at its lowest level."

Strategists at Bank of America Merrill Lynch have repeatedly highlighted a similar development among their private clients. Cash for the group has dropped to a record low as a percentage of total assets, they wrote back in July. And while that could be interpreted as investor confidence, all the resolution in the world is meaningless if you don't have capital to spare.

A few weeks earlier, also in July, Citigroup said that institutional investors they surveyed were holding roughly 2.25% of assets under management in cash, the lowest since at least the start of the eight-year bull market.

Institutional investors were holding the least cash since at least December 2008 back in June, which was and has continued to be a sign that confidence is overheating. Citigroup

All of this combined marks an interesting twist for a stock market landscape that's long been buoyed by the presence of money on the sidelines. Throughout the past couple years, bulls have cited that excess capital as waiting to flood back into stocks, pushing the market higher.

That argument holds less water now, and a red flag has been raised. After all, in 2000 and 2007, prior to bear market downturns, investors were confidently holding similarly low levels of cash.

It's worth noting, however, that not every Wall Street bank is sounding the alarm over low cash levels. Goldman Sachs has been a notable holdout over the past few months, even going as far as to cite "normal" cash holdings as a reason the bull market can continue for longer. Their data finds that investors seeking returns are holding cash levels that equal 3.3% of mutual fund assets, in line with recent history.

Goldman's differing outlook highlights the fact that there's no exact way to know how much cash is readily available for deployment across the entire stock market. For that reason, opinions will continue to differ over whether or not we're reaching a bearish tipping point.

But if the low-cash truthers out there are right, investors are going to have to sell if they want to free up money for other pursuits — or simply hold cash on the sideline. And that's when things could get dicey.

SEE ALSO: Here's how to protect yourself against a stock market 'fragility event'

NOW WATCH: Is bitcoin a bubble or the future of everything?

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