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Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

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Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#21

Post by robryan »

aresant wrote: post #7

Editorializing: Paid clicks on Google properties +43% - "yaaay we're driving more paid search!" Cost-per-click on Google properties -16% - "ouch our advertisers are seeing less value on these add'l clicks!" To me the second part of this is going to be most interesting to watch - if the clicks they are onboarding are lower quality, this is going to be a net negative.

Google is selling ad inventory where it didn't previously. Google Shopping is slowly rolling out across the world, initially in new markets there is a lot less competition than established ones, so the clicks can be had a lot cheaper.

For example we are probably paying half for the same quality Google Shopping clicks in New Zealand than we are in Australia or the US. This won't last.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#22

Post by gigatexal »

dangrossman wrote: post #14
gigatexal wrote: post #12

Earlier quoted context omitted.

if you're going to down vote, please respond with why

3% is a normal daily up and down for GOOG. In the past 15 minutes, it's regained 1/3rd of that loss in after-hours trading. The share price is still basically sitting at its all-time high. Your comment is potentially misleading, confusingly worded, and it's unclear what point you were trying to make. Some combination of those things should explain any downvotes.

Some data to back up the closing price (all but useless given the after-hours price and the apparent open for tomorrow being pretty much what it was today before earnings): I took the last 20 days of adjusted closing prices for GOOG from finance.yahoo.com, and a -2.18% change is 2.76 std-deviations away from the average fluctuation. Not significant but still a lot.

Thanks for response.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#23

Post by curiouscats »

btian wrote: post #6
fnovd wrote: post #4

Earlier quoted context omitted.

>Alphabet didn't miss anything; the analysts mispredicted performance. Taken to the extreme, no company ever underperforms and every unrealized expectation is the fault of the analysts.

False. Most companies provide guidance. They under perform if they do worse than guidance. Alphabet on the other hand does not provide guidance. And frankly it's quite silly to call 20+% growth a miss.

Undue attention is paid to short term blips. And it is indeed silly to get excited about exceeding analysts guess or falling short by a couple pennies a share.

About the 22% growth, that isn't being called a miss. They actually exceeded guesses on revenue. Net profit, while up, is what is being called a miss. Which net profit you want to use changes the increase but GAAP earnings were up 7%.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#24

Post by neximo64 »

btian wrote: post #16
theelfismike wrote: post #5

Interesting the effective tax rate went from 5% last year to 22% this year. What would cause that?

Mean reversion? 5% is very unusual.

You don't pay taxes on the mean. They are unusual because they were minimized.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#25

Post by afthonos »

fnovd wrote: post #4
afthonos wrote: post #3

Earlier quoted context omitted.

Personal pet peeve: the map is not the territory. Alphabet didn't miss anything; the analysts mispredicted performance.

>Alphabet didn't miss anything; the analysts mispredicted performance. Taken to the extreme, no company ever underperforms and every unrealized expectation is the fault of the analysts.

Orthogonal to my peeve. :-)

After earnings, there are two questions:

  1. How did X do?
  2. How did analysts think X would do?
Perfect analysts would predict Xs earnings every time, and the stock would be unaffected by announcements. But analysts aren't perfect. That's ok!

What's not ok is that the headlines are invariably "X misses expectations". No, the expectations were wrong.

I'm not saying a company can't do well or badly. Only that its job is not to match analyst expectations, and "X misses expectations" promotes that fiction.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#26

Post by samfisher83 »

aresant wrote: post #7

Editorializing: Paid clicks on Google properties +43% - "yaaay we're driving more paid search!" Cost-per-click on Google properties -16% - "ouch our advertisers are seeing less value on these add'l clicks!" To me the second part of this is going to be most interesting to watch - if the clicks they are onboarding are lower quality, this is going to be a net negative.

I can understand the usefulness of search ads and ads on maps, but if I see an ad on youtube it is unlikely I am going to go buy a product.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#27

Post by kbutler »

neximo64 wrote: post #24
btian wrote: post #16

Earlier quoted context omitted.

Mean reversion? 5% is very unusual.

You don't pay taxes on the mean. They are unusual because they were minimized.

"Reversion to the mean" is the process where later data is more typical than an outlying datum, so aberrations caused by outliers are averaged out, giving a result progressively closer to the mean of the data as subsequent data is added.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#28

Post by nerfhammer »

btian wrote: post #6
fnovd wrote: post #4

Earlier quoted context omitted.

>Alphabet didn't miss anything; the analysts mispredicted performance. Taken to the extreme, no company ever underperforms and every unrealized expectation is the fault of the analysts.

False. Most companies provide guidance. They under perform if they do worse than guidance. Alphabet on the other hand does not provide guidance. And frankly it's quite silly to call 20+% growth a miss.

It's a miss if the market had already priced in expectations that it would be better than that; indicating that the market price is wrong and a correction could be expected imminently.

To the extent that we can assume equity prices mean anything, of course.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#29

Post by mattnewton »

ariwilson wrote: post #10
aresant wrote: post #7

Editorializing: Paid clicks on Google properties +43% - "yaaay we're driving more paid search!" Cost-per-click on Google properties -16% - "ouch our advertisers are seeing less value on these add'l clicks!" To me the second part of this is going to be most interesting to watch - if the clicks they are onboarding are lower quality, this is going to be a net negative.

If the half of the world without an Internet connection gets online and starts clicking on ads, their clicks are probably going to be less valuable than the existing rich world clicks. I don't see how that is a net negative for anyone, though.

Right, that would bring the average down but the sum up, which seems to be happening?

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#30

Post by ChuckMcM »

MarkMc wrote: post #17

Revenue is up 22% but EPS is up only 7%. I would normally expect Google's EPS growth to be higher than revenue growth. Where are they spending all that extra income?

Notice that their TAC expenses for paid traffic went up over half a billion dollars to 10% of revenue from 8%. They are spending more to buy more traffic to grow click rate to cover lower CPC rates. You can model that like taking a hit to the gross margins.
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