Alphabet: Google's parent company loses $3.6 billion on 'bets'

Yes, the company actually called them bets. That’s the name of the category, and the numbers show why: Those ‘bets’ lost $3.6 billion in 2015 and $1.9 billion in 2014.

In August last year, Google dropped a major surprise, restructuring the company into new divisions under a parent company named Alphabet.

Today, for the first time, Alphabet reported financial results that distinguish between its core “Google” business (which include search and advertising, along with things like Maps, Android, YouTube, and Chrome) and the experimental businesses — such as self-driving cars — that Alphabet is calling “other bets.”

Yes, the company actually called them bets. That’s the name of the category, and the numbers show why: Those ‘bets’ lost $3.6 billion in 2015 and $1.9 billion in 2014.

It seems like a lot of money, but Alphabet is one of the few companies capable of making such bets for a long time: with just the $73 billion in cash and other securities which it has on its balance sheet, Alphabet could pay for the other ‘bets’ losses at this level for 20 years.

 

READ: Google's parent company overtakes Apple to become the most valuable company in the world

The tech behemoth also expects those losses to continue. “Given the early stage nature of a number of these efforts, they are likely to require additional investment prior to generating very meaningful revenues,” said Ruth Porat, Alphabet Chief Financial Officer.

The total Alphabet business increased its revenues by 18% to $21.3 billion in the final three months of 2015, and made an operating profit of $4.4 billion, according to BuzzFeed report.

Like many big U.S. companies, Alphabet’s revenues took a beating due to the rising value of the U.S. dollar, which severely cuts down the value of revenue earned in foreign currencies. If currency values had stayed the same, Alphabet’s revenue would have grown 24%, a difference of about $1 billion.