Google’s parent company Alphabet gained much limelight when it dethroned Apple as the world’s most valuable company for a brief, golden period at the end of the fourth quarter last year. However, the company was quickly overtaken by Apple and any hopes of re-occupying the ace spot were quashed by Alphabet’s first quarter earnings report, this year.
The quarter has seen Alphabet report a decline of 5 percent in its shares. While it would be something of a giveaway in most cases, its not when the company in question is worth over $500 billion. The decline has resulted in Apple managing to further outdistance th company.
Why this decline though? After all, Google — Alphabet’s chief forte — is doing as well as can be expected. The answer to this question actually lies in the question itself. While Google is doing quite well, Alphabet’s other bets are not.
This quarter for example, the company announced a revenue of $166 million from its other holdings, not bad right? With an operating loss of $802 million. And that’s still way better than last quarter’s $80 million revenue on an operating loss of $633 million. The extra money to cover the operating losses comes from Alphabet’s money making branches, which at present are centred around Google.
The second most recognizable brand name within Alphabet for example, Nest Labs — which is a home automation producer of programmable, self-learning, sensor-driven,Wi-Fi-enabled thermostats, smoke detectors, and other security systems — is struggling to find its footing.
For now though, the company needs somewhere around $60 billion to overtake Apple as the world’s most valuable company. The fact that it wasnt able to maintain the meteoric increase in its shares — A total growth of 39 percent this year with the last 3 months contributing to just 6 percent — is in part, responsible for this increasing gap.
The company’s performance was also slightly below expected — Again, slightly can run into billions when its a company of this magnitude. Alphabet reported earnings of $7.50 on a net revenue of $20.26 billion, as opposed to the expected earnings of $7.96 on revenue of $20.38 billion.
Meanwhile, the company continues to pin its hopes on an improvement in the prospects of it’s other properties — propelled by Google’s cash ofcourse — in order to bring about a more sustained growth of Alphabet.