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Alphabet’s earnings soar despite losses

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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.

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