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Alphabet beats estimates yet again, thanks to booming advertising business

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CIOL Writers
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Alphabet reported strong third-quarter sales and earnings that topped analysts' expectations courtesy strong growth in mobile search, programmatic advertising and smartphone use. Alphabet's shares were up nearly 3 percent at $1,020 in after-hours trading.

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Third-quarter revenue for Alphabet, the parent company of Google, jumped 24 percent to $27.8 billion, above the average analysts’ estimate of $27.2 billion. Profits of $6.7 billion, or $9.57 per share, were also well ahead of estimates.

"We had a terrific quarter, with revenues up 24 percent year on year, reflecting strength across Google and Other Bets," said Google's Chief Financial Officer Ruth Porat. Google's "Other Bets" losses narrowed to $812 million for the quarter, compared to $861 million a year ago, with revenues coming in at $302 million, up from $197 million.

The third quarter was the 15th time in a row where the company showed double-digit sales, year-on-year growth. The advertising sales at Google account for vast majority of the revenue.

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Google's other revenue line which includes hardware such as the Pixel smartphones and Home speakers as the well as the cloud computing business, also enjoyed solid growth. Sales from non-ad businesses rose 40 percent from a year ago to $3.4 billion in the quarter. Google is also trying to take down Apple in the high-end smartphone business with the launch of Pixel series smartphones.

However, Google's second generation Pixel smartphones had a rough debut with some customers complaining about a faulty screen and a clicking noise during calls. The company responded by doubling the warranty on the smartphone to two years and promising to fix the bug.

Capital expenditure rose to $3.5 billion in the quarter, from $2.8 billion, most of it spent on Google including on data centres, content acquisition for YouTube and hardware-related costs. During the quarter, Google signed a $1.1 billion smartphone deal with Taiwan’s HTC and released its latest Pixel phone.

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