Alphabet’s earnings soar despite losses
Business is booming at Google’s parent company, Alphabet Inc, even as it loses billions of dollars on kooky-sounding projects that may never produce any revenue.
Huge chunks of the losses have been piling up in Alphabet’s “X” lab, a wellspring of far-out ideas that has become known as a “moonshot factory” since Google co-founder Sergey Brin launched it about six years ago.
The lab is responsible for some once-zany projects, such as Google’s self-driving cars, that matured into potentially revolutionary technology. It also has pursued but ultimately abandoned other outlandish endeavours, such as an effort to convert seawater into gasoline.
Like going to the moon, exploring new technological frontiers is expensive. Although Alphabet doesn’t specify just how much money it pours into the X lab, it is among the costliest drains in a far-flung category that falls under the “Other Bets” segment in the company’s financial statement. Fiber, an effort to bring ultra-fast internet service to major US cities, is also requiring huge investments.
Operating loss
Alphabet’s secondquarter earnings report, released Thursday, showed an operating loss of $859 million (Dh3.2 billion) in Other Bets, widening from a $660 million loss a year ago. It’s the second consecutive quarter in which losses have deepened. Last year, Other Bets lost $3.6 billion — exceeding the annual revenue of many companies.
The Mountain View, California, company can afford to gamble because Google runs the world’s most profitable advertising network, spread across its dominant search engine, YouTube video site and Gmail, as well as millions of third-party websites that draw upon its marketing machine.
Powered by Google, Alphabet earned $4.9 billion during the April-June quarter, a 24 per cent increase from the same time last year.