Math fails Alphabet as profits slump 23% despite ad sales rise

Math fails Alphabet as profits slump 23% despite ad sales rise

Google parent Alphabet has suffered a 23% slump in operating profits as losses incurred by wayward investments took their toll on its bottom line, despite ad sales posting a healthy rise.

In its latest set of quarterly results, the tech titan was beset by mounting costs which undermined the continued steady performance of its digital advertising income.

Advertising remains the bedrock of Alphabet’s operations with revenue jumping to $33.92bn over the third quarter versus $28.95bn in the three months prior, with half of all search spend now accrued from automated bidding.

Such is the importance of advertising to Google that the sector now accounts for 85% of total revenues, which stood at $40.5bn for the quarter.

Profits headed in the opposite direction however, slipping by $1.7bn over the period, brought down by the highest quarterly expenses yet recorded by the internet staple amid heavy investment in cloud computing and consumer electronics.

Updating analysts on the numbers, Google chief executive Sundar Pichai said: “We’ve evolved from a company that helps people find answers to a company that helps you get things done.”

Now is a critical time for Google which awaits the outcome of several regulatory investigations into its operations which have the potential to further undermine growth, including accusations it has rigged the Android and search markets.

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