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Google joins Amazons who consume spray but to a lesser extent



MarketWatch First take

By Teresa Flight

Posted: October 28, 2019 8:51 pm ET

Profits from two of the biggest technology names are affected by the return to investing in the future of business

Cost of new rentals and real estate added to Google in the last quarter.

Alphabet Inc. High Profit Lack is not just the result of losses from equity investments: Continued high rental and real estate costs from internet search and hippo advertising also play a role.

Google's parent company reported third-quarter earnings far below Wall Street forecasts Monday afternoon. alphabet

GOOG + 1

.97%


GOOGL + 1.95%

reported a net income of $ 7.07 billion, or $ 10.12 per share, a year over year decline of 22% , which missed estimates by nearly 18%.

Full Profit Results: Alphabet Profits Miss Valuations, Shares Decrease

Alphabet Managers Blame Free Profit Decline, A Long Habit For Google That Declined After Chief Financial Officer Ruth Porat Arrived from Wall Street. This is the same reason and another big name in technology, Amazon.com Inc.

AMZN + 0.89%

dropped its profits this year as the two companies battle new arenas – such as Amazon's growing ad business and Google's growing enterprise cloud offering – for more a promising future.

Hiring is a big part of Google's spending, Porat said at a conference call Monday, along with investments in cloud data centers and offices to accommodate all new employees. Alphabet added 19,724 workers last year and 6,450 in the third quarter.

"The growth in absolute staff in the third quarter was unusually high, reflecting the addition of new college staff," said Porat, as he promised. this number of employees "will be in line with growth in 2018"

The company also said it spent $ 7.2 billion on capital expenditures, up from $ 5.3 billion a year ago. Costs during this quarter included the construction of data centers and the cost of new offices and campuses in the Bay Area and in Seattle. Technical infrastructure, such as data processing technology, represents only 60% of capital in the quarter, Porat said.

"Investments in office facilities include the acquisition of a $ 1 billion portfolio of buildings in Sunnyvale and the purchase of two buildings to expand our presence in the Seattle area," the CFO said.

However, Porat stated that he expects the major engine of its capital expenditures to continue to expand its data centers and to increase computational requirements for machine learning, cloud search and YouTube.

Compared to Google's rival in Seattle, Alphabet's costs still seem anemic. Amazon added nearly 100,000 employees in the third quarter, which means it hired about as many people each week as Alphabet did throughout the quarter. He also said he spent $ 4.7 billion over the quarter to buy property and equipment, which appears to include building a data center and warehouse.

No company has made a big splash in acquisitions recently, though Alphabet is reportedly looking good. – known name: Fitbit Inc.

FIT + 30.86%

. Reuters said Monday that Alphabet is considering acquiring a carrier to round out its growing hardware offerings, which could lead to much more door-to-door money.

Alphabet has definitely made a big profit in the last quarter and is worth keeping an eye on Google's spending as potential antitrust litigation becomes a bigger factor in the next year or two. But if tech titans continue to spend among tariff fears and whispers at the end of the current tech boom, investing in the future is a much better goal than buying more shares.

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