
Alphabet Q3 Revenue up 24% - MarkMc
https://www.cnbc.com/2017/10/26/alphabet-earnings-q3-2017-.html
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MarkMc
Given its size, Google's growth rate is incredible. What's more, they still
have a long way to optimise ads. I was recently shown a YouTube ad for cat
food, but Google should know I don't have a cat because it has my entire photo
stream for the last 3 years.

~~~
speeq
Does anybody in your family have a cat?

I recently visited my brother and he was talking about crowdfunding a project
of his..guess what? YouTube showed me ads for crowdfunding platforms later
that day, probably because I was logged into his wifi.

It sure feels a bit creepy sometimes!

~~~
nofilter
Yeah, I've been in a meeting with nobody using the internet and our phones
just merely sitting our pockets. 3 hours later I saw ads relevant to the
conversation in the meeting, for which, again, I had not googled or used
internet for, on Instagram.

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thesehands
Do you think this may be a bit of Baader-Meinhof going on?

~~~
1_player
Probably. A couple of non technical friends and I were talking about Bitcoin
one evening, they had never heard of it.

A few days later one of these friends calls me asking how is it possible that
he's seeing Bitcoin ads everywhere after we talked. I also thought that's
Baader-Meinhof happening, but it doesn't make ads any less creepy.

~~~
samsonradu
Ha, I had a couple of experiences alike also. But then if you look at the big
picture, it makes sense. You're a solid target for Bitcoin ads, you're in the
same location with 3 other people, likely same demographics, interests, social
status etc. and they become a target too?

This is all suppositions of course, I have no idea how it works. But I've
tried this experiment with my gf once:

We both opened Instagram and started talking about a product class that we
never saw ads for there, say like shampoos. We even mentioned a few brands and
then waited for the ads to hit us. They never did.

EDIT We use iPhones

~~~
1_player
> you're in the same location with 3 other people, likely same demographics,
> interests, social status etc. and they become a target too

Nice, let's call this technique "advertisement by osmosis" :-)

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adventured
Alphabet is closing in on Apple's financial crown. At the current rate they'd
likely surpass Apple in net cash in the next 12 quarters, barring a
shareholder payout (which is likely).

Google, the subsidiary, is chasing down $40 billion in annualized operating
income ($8.7 billion this quarter). To put that into perspective, that's equal
to twice the operating income of Johnson & Johnson (a monster corporation with
a $380 billion market cap). It wouldn't be far fetched for Google to reach
$55-$60 billion in operating income in three years.

Alphabet now has $100 billion in cash and no meaningful traditional debt.
Apple has about ~$160 billion in net cash, a sum that has mostly stopped
increasing. Google should stay ahead of Apple in net tangible assets this
quarter as well.

Given Alphabet's growth rate (and assuming it slows some), they should get
near Apple's general $40x billion net income territory in three years.

By contrast, Microsoft also has an immense amount of cash, at $138 billion
(cash or equivalents). However they're carrying $76 billion in long-term debt.
Google presently has approximately 5x the net tangible assets of Microsoft.

~~~
dkrich
This assumes Apple won’t accelerate earnings, though. I think given the
blowout earnings we’ve seen elsewhere in the market this is unlikely
especially with Apple looking to raise average unit costs on the iPhone and
iPad.

~~~
jacksmith21006
Apple is forecasted in their FY 2017 to be far worse than their 2015. While
Google does over 20% growth.

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holydude
Anything besides ads that actually make them money ? I am honestly curious if
they still cannot find a way how to make money with anything else besides ads

~~~
nostrademons
$3.4B in "other revenue" (for Google), which includes hardware sales, their
cut of app sales on Google Play, enterprise products like GSuite, and Google
Cloud. $302M in "other bets" (the non-Google Alphabet companies), largely from
GFiber and Nest.

Google - like Apple, Berkshire, and several other companies - suffers from the
curse of too much capital. I would _love_ to have a business with $3.4B in
revenue - it actually puts you in the Fortune 1000 at around #675, right
alongside Urban Outfitters and Citrix and slightly ahead of Diebold,
Abercrombie & Fitch, and Warner Music Group. But when your other business is
AdWords and makes about $90B a year, it doesn't really move the needle.

~~~
aneesh
That's $3.4B _per quarter_ , or $13.6B annualized run rate, putting it closer
to #200 on the Fortune list by revenue.

~~~
matt_wulfeck
Compre to Apple’s $6B service revenue, which is quickly on the way to be a
fortune 100 company.

Both companies need diversification. I’m with Google with this one _long term_
because I think their bets are more interesting.

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thisisit
One thing I am curious about from the finance perspective is - How does the
revenue recognition (RevRec) happen in the internet ad business? If company A
has committed $200 million in ads over 6 months to Google. How will Google
book and recognize this as revenue?

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matt4077
I'd be very surprised if it were any different than what's standard, which is
to recognize the revenue when the product/service is delivered.

~~~
thisisit
Sure but the problem lies the exact definition of delivered. What does
delivery mean here?

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pw
Wow, that’s quite a bit, right?

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bsaul
It’s time for people in the valley to team up and create a real competitor to
google ad. This has been lasting for too long.

~~~
tenpoundhammer
Appnexus is a good competitor to google ads. It provides many of the same
features that google ads offers. [http://appnexus.com](http://appnexus.com)

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sova
G is for Alphabet! (poking fun at the legacy stock ticker)

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samfisher83
I read this in another article:

[https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-
in...](https://www.cnbc.com/2017/10/26/amazon-alphabet-microsoft-intel-all-
crush-earnings.html)

>In a call with CNBC, Alphabet CFO Ruth Porat reiterated the company's theme
of "products with AI [artificial intelligence] at their core," but the main
function of that AI today seems to be optimizing ad revenue.

Are all the improvements to machine learning being made to just to show us
more targeted ads?

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matt_wulfeck
Have you used Google Photos yet? The benefit of AI is strongly apparent there.

