Google’s new parent company Alphabet has overtaken Apple as the world’s most valuable company by market value, despite its ‘moonshots’ losing it $3.5bn over 12 months.
Alphabet’s share price rose almost 5% in after-hours trading following the release of its fourth quarter and annual result smashed expectations.
The company also reported a 17.8% increase in quarterly revenue to $21.3bn – crediting strong advertising sales on mobile devices and YouTube.
The rise puts Alphabet’s value at $549bn (£382bn) compared to Apple’s market capitalisation of about $534bn (£371bn).
Google reshuffled its organisation under a parent company Alphabet in August 2015. The move was largely an attempt to separate its core internet advertising business from its more speculative ‘moonshots’ such as self driving cars and smart glasses.
The results suggest the self-driving car project is losing Google money. Profits for the three months to the end of December came in at $4.9bn – a rise of 5% on the same period last year.
That was despite its raft of experiments, or ‘moonshots’, collectively racking up operating losses of $1.2bn in the quarter.
While Google did not list the financial progress of each one, they include its driverless car, glucose-monitoring contact lens and Internet balloon projects – the latter, known as Project Loon, aiming to deliver connectivity to areas of the world without it from a network of balloons.
Ronald Josey of JMP Securities told the Reuters news agency investors would excuse those losses: “As long as the core business continues to operate well with accelerated revenue… investment in those businesses can continue,” he said.
Google remains the core earner – with its advertising revenue rising almost 17% to $19.1bn, aided by 31% growth in paid clicks.
While this was the first time Alphabet had reported consolidated results, its statement showed it paid an effective tax rate of 5% – down from 18% in the same period last year.
The results follow recent controversy surrounding Google’s corporation tax payments in the UK. The UK Government claimed a victory after securing a multi-year corporation tax payment from Google of £130m – only for the payment to later attract claims of sweetheart deals.