Google parent's shares dive as YouTube changes, competition hurt revenue

Google headquarters in Mountain View California.                  Stephen Shankland  CNET

Google headquarters in Mountain View California. Stephen Shankland CNET

Google's advertising revenue rose by 15% to $30.72 billion, a sharp slowdown from 24% growth a year ago, according to its earnings report for the first quarter of 2018.

This month, Google said it would offer smartphone users five browsers and search engines as part of the company's effort to meet European Union competition concerns.

The company's stock fell about 3% on the news in after-hours trading.

Google, of course, is going strong: Its advertising business generated $30.7 billion in revenues in the quarter, up from $26.6 billion a year ago. Excluding the EC fine, Alphabet said earnings were $11.90 per share.

Expenses have surged faster than revenue for much of the past two years as it adds data centers, offices and YouTube content licenses, concerning some investors amid increased scrutiny on the company's privacy practices and the advertising restrictions at YouTube.

One reason for the less than stellar results is the €1.5bn ($1.7bn) fine assessed by the European Commission in March for antitrust violations related to Google's ad business.

If you were hoping Google would divulge its cloud revenue you'll just have to wait for a more "appropriate time".

On average, Wall Street was looking for earnings of $10.58 per share on revenue of $37.34 billion.

While Google has dominated the online ad market for nearly the entirety of its existence, its first quarter earnings report suggests that competitors may be nipping at its heels.

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Even though revenues climbed, quarterly profits dipped a significant 29 percent to $6.7 billion.

In any case, though, revenue growth disappointed, exacerbated by the impact of timing of product changes for Google properties, an industry lull in ad and marketing spending and some changes in YouTube ads.

While Alphabet continues to grow, the speed at which it's growing-overall and in its main ad business-has slowed.

Shares of Alphabet make up about 9 percent of QQQ's holdings. Its "other revenues" operations, which includes Google's hardware business (phones, speakers, laptops, etc.) and its cloud services business, delivered $5.45 billion in revenue, a 25% uptick from previous year.

Paid clicks growth slows.

Other bets revenue: $US170 million, compared with $US150 million past year.

The company said it would have met expectations, adjusting for currency fluctuations. Operating income from the division saw an $868m loss for the quarter, on revenues of $170m.

Alphabet's traffic acquisitions costs (TAC) - a measure of the Google parent's payments to other companies to feature its search engine - were $6.86 billion. Google's network revenue rose, while the Google Cloud platform and Google Play were both highlights.

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