
Alphabet Inc aiming at becoming the next $1 trillion company
- Alphabet Inc. aiming at becoming the next U.S based $1 trillion company.
- Alphabet may have to reduce costs in order to hit the new target.
- Alphabet's accounts show the cost of revenue to have risen by 34% in 2018.
- Sundar Pichai took over Alphabet Inc. as the new Chief Executive Officer.
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The parent company of the world-renowned Google, Alphabet Inc. is now on a quest to become the next $1 trillion revenue company at the turn of the decade, or more specifically, 2020. If it achieves this goal, it will be the third US-based company to join the trillion-dollar list. However, while everything seems favorable for the company, achieving the trillion-dollar list isn’t going to be an easy feat.
Analysts believe that growth may be slower in the new year and will be at an anticipated 17.8%, amounting to a total of $191.5 billion in revenue, still a small stretch away from the goal. Earnings growth may rise by a forecasted 10.3%, less than revenue growth, signaling that costs are anticipated to increase in 2020.
Insight Into Alphabet’s Accounts
Copy link to sectionAccording to financial statements, the cost of revenue on the income statement has consistently grown and in 2018 saw a 34% rise compared to the previous year. Besides the cost of revenue, there are other worrying costs such as higher traffic acquisition costs on mobile devices, higher research costs, etc. The same trend was seen in 2017 which saw a 51% rise in the cost of revenue compared to the previous 12 months
However, revenue has also steadily increased during this time but less so than the cost of revenue, meaning that costs need to be controlled in order for margins to be higher and for Alphabet Inc. to reach its $1 trillion goal in the coming year.
This is going to be quite an ordeal for the new CEO as he attempts to keep costs under control and also invest in the future adequately. Speaking of the new CEO, there is more where that came from.
Sundar Pichai Took Over As The New Alphabet Inc CEO
Copy link to sectionThose who stay tuned with tech news already know that Google’s CEO Sundar Pichai will now be taking over as CEO of Alphabet Inc as well and will be replacing the co-founder Larry Page. The news has been met with enthusiasm by investors and share prices have risen by 3.8%. However, the S&P 500 average has also risen by 4.2%, which means that shareholders still require more earnings growth.
Pichai will probably want to focus on the operational side of the business and attempt to improve the business’s bottom line. Factors such as other income and smaller earning segments must be optimized in order to improve earnings per share and allowing the company to achieve a higher net income.
It seems that officials at Alphabet are confident about the appointment of Sundar Pichai as the new CEO and are looking forward to adding their name to the trillion-dollar hall of fame.
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