Alphabet posts strong revenue on video market, stock surges

Thu Jul 28, 2016 9:10pm EDT
 
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By Julia Love and Rishika Sadam

(Reuters) - Alphabet Inc, Google's parent, on Thursday revealed that efforts to push its vast advertising business toward mobile is paying off as second quarter earnings handily beat Wall Street's expectations.

The results put to rest lingering concerns about how the rise of mobile might impact Google, which has a strong mobile presence with its Android smartphone operating system but has long relied on desktop search traffic to power its profits.

Advertisers typically pay less for user clicks on mobile ads than on desktop ads, Google's traditional strength, but the strong earnings performance suggests that is beginning to change, said Colin Gillis, an analyst with BGC Partners.

"They’re doing an excellent job of pulling the mobile landscape through to being more efficient," Gillis said.

Alphabet said revenue grew by 21.3 percent to $21.5 billion, while earnings jumped to $4.88 billion from $3.93 billion for the comparable period a year ago.

The company's shares rose 6.5 percent to $816 in after-hours trading on Thursday.

Robust gains in the red-hot video market also drove the company's growth, Google Chief Executive Officer Sundar Pichai said during a call with investors. Over the past year, Google, Facebook and Twitter have all doubled down on video, a format where advertisers are willing to pay a premium for a few seconds of users' undivided attention.

Google has used artificial intelligence to improve video recommendations to users, driving more engagement on the site, Pichai said.   Continued...

 
A woman holds her smart phone which displays the Google home page, in this picture illustration taken February 24, 2016.   REUTERS/Eric Gaillard/Illustration/Files