GOOGLE PARENT COMPANY Alphabet has done the unthinkable in tech marketing terms and announced a drop in profits for the last quarter.
After-hours stock prices dropped by four per cent as the company blamed rising costs and staff headcount for the 23 per cent dip in profit in Q3.
Analysts were caught off-guard by the announcement, especially as the company's lifeblood - its ad business, performed well with $33.92bn in revenues, up from $28.95bn.
Ruth Porat, chief financial officer at Alphabet pointed out that a bad quarter wasn't a big deal and that Alphabet works in terms of the long term: "We remain very focused on continuing to enhance the experience for users over the long term."
The big issue has been Alphabet's "other bets" such as Waymo, it's self-driving car project, which has seen losses increase to $941m. That's being compounded by Google, which is in the midst of its ongoing fight with regulators worldwide.
Google chief executive Sundar Pichai said: "We're focused on providing the most helpful services to our users and partners, and we see many opportunities ahead."
But it's headcount that has been the big drain. As well as dealing with unhappy campers over issues like the #metoo movement and the JEDI contract, recently awarded to Microsoft, it has also been expanding through natural growth and acquisition.
On Monday, reports began to emerge of plans for Google to buy Fitbit, to give it a place in the fitness tracking market that isn't served by its own Wear OS. As yet, nothing has been confirmed.
It's too early to see if the latest Pixel lines are going to help matters next quarter, but last year's Pixel 3 range sold poorly (despite no official figures from Google), further compounding the gulf between the profitability of its various divisions. µ
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