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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

#51

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

I'd have to take a look at their statements to see, but it sounds like they had some one-time charges that resulted in a tax benefit thereby reducing how much they had to pay in taxes, ergo the 5% rate. And since those no longer apply(being one off items) their tax rate is back where it should be.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#54
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 believe its that the supply of sold online ad clicks has grown significantly (fb) and therefore marketers have more bidders resulting in lower costs (not just for google but the whole market)

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#55

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

For FYE 2012 through the end of 2015 Alphabet's Income After Tax has been, on average, 81% of its Income Before Tax. That implies a 19% average tax rate. Excluding Q4 2015, the same ratio for Q3 2015 through the end of Q3 2016 was 82%. That implies an 18% average tax rate.

The anomaly was Q4 2015, not this most-recent quarter.

Source: Google Finance

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#56

Earlier quoted context omitted.

If you're used to reading the financial news, the headline is fine, since you know what they're talking about.

I'm not so sure. "Analysts Miss X Results" immediately makes you wonder "why", which is a fair question. "X Misses Expectations" instead makes you think X had a bad quarter. I think forcing people to make the conversion in their head every time is bad headlining. Of course, there's something to be said for it being a "term of art". This may just be my layman's interpretation.

Every field has its own jargon and shorthand notations. This particular headline is phrased in the usual way for such things.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#57
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?

They did increase headcount by more than 10k (from ~62k to ~72k). Headcount tends to produce more revenue eventually, but there's a lag. Staffing up by that much indicates that they're predicting significant growth.

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#58
post #18
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.

How can it be a net negative? Net change in value = 1.43 * 0.84 = +20%

I think his point was that if CPC decreases monotonically forever, then eventually revenue will have to suffer regardless of volume growth. As others have mentioned, this doesn't take into account the mix of new ecosystems, though it's noteworthy that Google doesn't break down CPC by segment so we could see trends for desktop/mobile/YouTube/etc/

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#59
This was due to a one time tax hit.

>Alphabet was forced to swallow a $586 million tax charge on the non-GAAP line related to its stock-based compensation, costing the company about 83 cents a share — the difference between a substantial earnings miss and a huge beat.

>The tax charge is the result of a rule change in the U.S. targeting companies’ use of stock-based compensation to sweeten their adjusted earnings numbers. The Financial Accounting Standards Board last year implemented changes that force companies to better account for the tax benefits of paying employees in stock instead of cash, and the charge reflected the benefit Alphabet had realized for the full year.

http://www.marketwatch.com/story/the-tax-hit-that-made-googl...

Re: Alphabet Announces Fourth Quarter and Fiscal Year 2016 Results

#60

So crazy these numbers aren't in thousands like most companies' financials but in millions...

The financial statements of these companies boggle my mind sometimes. In addition to Google's, I saw this bit on Microsoft's today:

> Accounts receivable, net of allowance for doubtful accounts of $426 and $335

What they're saying is, that's $426 million dollars they're owed that they expect to not get, because of defaults and deadbeat customers. And it's just a line item!

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