Alphabet's higher spending worries investors, sending shares lower
- Spending was pushed higher by Google boosting staffing on its cloud computing division
Alphabet Inc reported sharply higher fourth-quarter spending on video content, employees and facilities, worrying investors who sent the tech company’s shares down about 3 per cent after hours on Monday.
Google’s parent company beat Wall Street’s estimates for revenue and profit, but the bigger-than-expected spending prompted investors to question whether cash funnelled into Alphabet’s newer businesses will generate the returns that its search engine unit historically has.
“While the core business is still growing impressively, the significant spending shows growth isn’t quite as capital-light as had been hoped,” said George Salmon, a stock analyst at financial firm Hargreaves Lansdown.
The company reported US$31.07 billion in total fourth-quarter costs and expenses, up 26 per cent from last year. Capital expenditures rose 64 per cent compared to last year, up to US$7.08 billion.
Spending was pushed higher by Google boosting staffing on its cloud computing division, promoting its consumer devices and YouTube subscription packages and acquiring office buildings in Silicon Valley and New York City.