Google is showing discipline with 'moonshot' spending, which is exactly what investors wanted
Google isn't blowing that much money on projects like self-driving cars after all — less than 10% of its capital expenditures in 2015 were for forward-looking products outside its core.
This was the first time Alphabet broke numbers out for the core "Google," which includes the businesses most of us think of — search, advertising, YouTube, Android, and so on — and "Other Bets," which includes long-term projects like fiber-based internet access, self-driving cars, and internet-bearing balloons.
Alphabet CFO Ruth Porat said that the company had to make some "tough calls" and that there was a "disciplined envelope" across Other Bets.
Porat also made sure to stress that the company is going to keep spending a bunch of money on that core, too, by highlighting a bunch of areas where its trying to innovate.
She said:
In many ways, some of Alphabet's biggest moonshots are in Google itself. From driving the next wave of computing through machine learning, capitalizing on the shift to the cloud by enterprises, building platforms like virtual reality, and pursuing the opportunities we see with the "next billion" users in emerging markets, you should expect Google to continue to invest in efforts to improve life for billions of people.
This line from Porat's prepared remarks was significant for a couple of reasons.
But the report also proved that ads are still a hulking business: That's how Google pulled in $19 billion of its $21.3 billion in revenue this quarter.
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