Google parent Alphabet reports

Google parent Alphabet reports earnings miss, shares fall.

SAN FRANCISCO — Alphabet shares slid after the Google parent company's fourth-quarter earnings missed Wall Street estimates, prompting concern about growing expenses.

Analysts expected Alphabet (GOOGL, GOOG) to report earnings per share of $9.98, up from $7.56 a year ago. Instead, excluding a one-time $9.9 billion charge from the new tax law, it reported earnings per share of $9.70. Alphabet said the one-time tax hit caused a net loss of $3.02 billion in the fourth quarter.

Shares fell as much as 5% when Alphabet reported financial results after the market closed Thursday.

Separately, Alphabet also named John Hennessy, a board member since 2004, as the Internet giant's new chairman, replacing Eric Schmidt, who said in December he would step down from that role. The board also authorized $8.6 billion in share repurchases.

"We have been making substantial investments in our three biggest bets — cloud, YouTube and hardware," Google CEO Sundar Pichai told analysts Thursday. "These bets have enormous potential, and already they are showing real momentum and gaining traction."

Revenue rose 24% to $32.32 billion from a year ago, higher than analyst expectations of $31.86 billion. Net revenue — Alphabet's sales minus traffic acquisition costs — was $25.9 billion. Analysts had expected revenue excluding those payments to partners of $25.57 billion, up from $21.22 billion a year ago.

Traffic acquisition costs, known as TAC, were $6.45 billion, up from $4.85 billion a year ago. The growing fees Google pays to third-party search partners such as phone makers and Web browsers is an increasing concern for Google's advertising business. Searches on mobile and YouTube require Google to pay out higher fees. 

During a conference call with analysts, Alphabet's chief financial officer Ruth Porat said to expect TAC to continue to increase as a percentage of revenue until after the first quarter.