BUSINESS OF ALPHABET

THIN PROFIT FOR GOOGLE PARENT

GOOGLE parent Alphabet reported thinner profit margins as the internet giant spent heavily to expand its cloud and YouTube businesses. The company’s shares slipped in late trading. Google’s fourth-quarter capital expenditures jumped 80 percent to $6.85 billion (R91.6bn). The company’s operating margin, a closely watched measure of profitability, was 21 percent down from 24 percent. Alphabet is relying on its ad business to support sales and profit growth as it develops new offerings such as cloud services and consumer hardware. The company’s higher-growth businesses, which also include YouTube, are less profitable than the original Google desktop search service. “Capex is growing at a sizeable clip and the primary driver continues to be investing in technical infrastructure to support growth,” Alphabet chief financial officer Ruth Porat said. “By that we mean data centres and machines. This reflects our outlook for global growth in ads, search, YouTube and cloud.” Costs were also pushed higher by hiring, mostly for the cloud business. Alphabet had 98 771 employees at the end of last year, up 23 percent from a year earlier. Porat said headcount growth should moderate this year. The company also spent heavily on YouTube, which shares a lot of its ad revenue with content creators and larger media partners. Google is asking investors to trust that investments in future growth will pay off, but the company discloses limited financial details. I Bloomberg