Google parent Alphabet replaced Apple as the highest valued company in the world as its share price rose 9% to around $750 in after-hours trading in response to strong fourth quarter results.
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In the first quarterly results since officially switching to the Alphabet structure on 2 October 2015, the company reported a profit of $4.9bn on revenues of $21.3bn.
Profit was up 7% and revenue rose 18% compared with the same period in the previous year – before the restructuring that created a parent company that includes Google stripped down to its core.
"Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we've been investing for many years,” said Ruth Porat, chief financial officer for Alphabet.
Alphabet’s share price surge means the company is now worth around $568bn, compared with Apple’s value of $535bn.
Apple took over from Microsoft as the most valuable company in 2010, a position previously occupied by IBM.
At the time of the restructure, Google founders Larry Page and Sergey Brin said that, by separating the exploratory projects from Google’s core internet operations, investors would be able to see that the core business remained highly profitable, even if other ventures failed to show a profit for years.
The first Alphabet results showed that, while Google’s operating income rose to $23.4bn on revenues of $74.5bn driven by increased online advertising, the “Other Bets” business generated only $448m, resulting in an operating loss of $3.5bn.
Read more about Alphabet and Google
- Alphabet is a new parent company that includes a “slimmed down” Google alongside companies not related to core internet products.
- Alphabet’s quarterly revenue was $15.1bn, above analysts’ average estimate of $15bn, while profit was $7.35 a share, beating predictions of $7.20.
- Google is to pay more UK tax in line with new rules – £130m, said to cover the last 10 years – but denies any wrongdoing in the past.
UK back taxes
Paid clicks on Google websites were up 40% compared with the same period a year ago and up 22% compared with the previous quarter.
Analysts said that, like Facebook, Google’s advertising business continues to grow despite the transition of users to mobile devices. The company continues to attract investors despite losses in the experimental businesses, which develops projects such as driverless cars and smart home products.
The earnings made no mention of the row over UK taxes, but the Google’s UK revenue rose 16% to $1.92bn in the fourth quarter, according to the BBC.
Google recently agreed to pay £130m in ten years’ back taxes, but the deal has been criticised by opposition politicians and others as too lenient.
The deal has also attracted the attention of European authorities, with European competition commissioner Margrethe Vestager indicating that she may investigate, according to the Guardian.