Google shares seen lower as earnings highlight higher Google expenses

Google shares are seen opening lower, Friday as the tech giant announced strong revenues but high Google costs.

Google shares seen lower as earnings highlight higher Google expenses

Google shares ended lower Thursday and are seen opening in the red Friday, as Google parent Alphabet’s results showed that Google costs rose sharply in 2017.  That detail outshone news that ad revenue at the online giant surged.

Google shares closed 0.05% lower at $1,181.59 in the US Thursday. And pre-market trading activity currently shows Google shares are poised to open 3.52% in the red, Friday.

Google revenues top $100Bn

Google parent’ Alphabet’s earnings showed that total revenues across 2017 hit $110.9 billion for the first time, up from $90.3 billion in 2016.

Google also reported total fourth quarter revenues of $32.3 billion and net income of $6.8 billion. The profit was a little short of analyst expectations of $7 billion.

While Google’s ad revenues surged $27.2 billion in Q4 2017, other Google costs weighed on overall profits. However, those costs are due to investment in securing Google’s future beyond search, the tech giant said.

"Our business is driving great growth,” said Alphabet’s CFO, Ruth Porat. “Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses."

Focused on building future growth

While Google costs and some YouTube issues have been raised as concerns, Google made it clear in its post earnings release analyst call, that it considers costs and investments an important part of “building a second wave of growth within Google.”

One area where Google has invested, is in its cloud services, which are proving popular and will likely grow further now the firm has all the required approvals and details to work in enterprise cloud provision.

“With respect to cloud, we’re seeing the benefits of a fully featured enterprise offering and an expanded go-to-market team, bringing our advantages in infrastructure, data analytics, security and machine learning to more customers,” Porat said in her opening statement on the call.

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