Alphabet, formerly Google, sets share buyback, shares jump
By Deborah Todd and Steve Trousdale
SAN FRANCISCO (Reuters) - Alphabet Inc, the new holding company for Google, introduced its first share buyback and beat Wall Street's profit forecast on Thursday, helped by solid progress in mobile and video advertising, sending the stock to its highest-ever level in after-hours trading.
Revenue and profit well above analysts' average forecasts, along with the unexpected buyback, was welcomed by Wall Street, which is now betting on further growth.
"They're in a great position in the overall advertising space, whether it's search, display or mobile," said Kerry Rice, a Needham & Co analyst. "They've got the right program to continue to grow at a solid pace and be dominant in those spaces."
The results come at a pivotal time for the company as it navigates the transition from desktop to mobile, where ads are generally less profitable, while facing growing competition from rivals like Facebook Inc.
At the same time, it is moving into a new corporate structure that will put more visibility on parts of Alphabet such as its secretive research arm, Google X. Next quarter will be the first in which it reports results under that structure.
Company executives touted strength in mobile search for the strong results. "Search traffic on mobile phones have now surpassed desktop traffic worldwide," said Sundar Pichai, chief executive of Google Inc.
Shares of Alphabet rose almost 9 percent in after-hours trading to $741, easily a record. At that level, the company's market value would be around $500 billion, making it the second-most valuable company in the S&P 500 after Apple Inc.
On a strong day for technology companies, Amazon.com Inc and Microsoft Corp shares also rose sharply after hours, following better-than-expected results. Continued...