On The Fly: What to watch in Alphabet earnings report
Alphabet (GOOG, GOOGL), the parent company of Google, is scheduled to report results of its third fiscal quarter after the market close on October 27, with a conference call scheduled for 4:30 pm ET. What to watch for: 1. CAN GOOGLE GROWTH RATE RISE AGAIN?: Following its last quarterly report, a number of Wall Street analysts raised their price targets on Alphabet, citing the company's "strong" Q2 results and accelerating Google growth. Piper Jaffray, Jefferies and Needham were among those who pointed out that mobile search and YouTube were key growth drivers in Q2. More recently, Oppenheimer analyst Jason Helfstein said he remains bullish on Alphabet ahead of its Q3 earnings release. However, the analyst sees more headwinds than in Q2 as agency holding company results suggest a slowdown in large-company ad spending amid the U.S. political cycle. On the positive side, Helfstein says U.S. retail sales remains healthy and YouTube usage remains strong. Furthermore, he expects moderate ad spend increases in Asia, Europe and Latin America and share gains from Yahoo (YHOO) and Microsoft (MSFT). 2. PIXEL, OTHER PRODUCTS: On October 4, Google unveiled plans for new smartphones, dubbed the "Pixel" and "Pixel XL." Although these two devices are built by HTC, Google takes full credit for the design. The phones will be the first with Google Assistant built in, feature improved Google Cloud storage, and also sport a camera the company said has been rated above that of Apple's (AAPL) iPhone 7. Google also showcased its Daydream View, a VR headset covered in fabric, the new 4K Chromecast Ultra, its modular Wi-Fi router system, and Google Home, the AI-powered speaker aimed at competing with Amazon's (AMZN) Echo. 3. 'ALPHA BETS': Outside of its core Google business, Alphabet's "Alpha Bets" have seen a lot of news over the last three months. In August, Chris Urmson, chief technology officer of Google's self-driving car unit, announced he was leaving the company. Sources quoted by the New York Times said Urmson had become unhappy with the direction of the project and "quarreled" with Google co-founder Larry Page, though he disputed that take. Later in the month, Reuters reported that Google had hired Shaun Stewart, who had been a top executive at Airbnb, as director of its self-driving car project. This morning, The Wall Street Journal reported, citing comments made by X chief Astro Teller, that Alphabet is turning its self-driving car project into a standalone business, graduating the project from its research lab. Teller said that the unit will likely be expected to begin generating revenue, but not necessarily a profit, "soon." Also, Fortune reported that Alphabet unit Nest Labs was going through another restructuring plan, via which the subsidiary's entire platform team will be absorbed by Google in order to build a unified Internet of Things platform. 4. ONLY SELL ON THE STREET: During the quarter, research firm Wedbush issued a rare Sell recommendation on Alphabet, arguing that "attention markets" -- the auctioning off of consumer attention -- could dethrone search as king of consumption. Becoming the only analyst at a major firm currently placing a sell-equivalent recommendation on Google's parent company, Wedbush analyst James Dix downgraded the search and technology giant to Underperform and cut his price target to $700 on September 27 on concerns that he called the "four horsemen of the search apocalypse" -- four trends that could fundamentally disrupt search advertising.