Alphabet Explodes 7% Higher After Beating Estimates Across The Board, 20-For-One Stock Split

Heading into today's post-market earnings juggernaut, which includes EA, SBUX, PYPL, GM, and others, the one company investors were most focused on was Google, pardon Alphabet, the third largest US company by market cap  As Bloomberg writes in its preview, investors will be laser focused on progress in Alphabet’s Google Cloud segment. The internet company’s cloud-computing unit is the No. 3 player in the U.S., behind Amazon Web Services and Microsoft’s Azure.

But the far bigger question is whether Alphabet would continue the trend of earnings beats set last week with Microsoft and ahead of the coming earnings from Amazon and Facebook.

The answer, at least judging by the stock's kneejerk reaction which is 3.5% higher, was a solid yes. Here are the results:

• EPS $30.69 vs. $22.30 y/y, beating estimates of $27.35
• Revenue $75.33 billion, +32% y/y, beating the estimate of $71.89 billion
• Revenue ex-TAC $61.90 billion, +33% y/y, beating the estimate of $59.37 billion
  • Google Services revenue $69.40 billion, +31% y/y, beating estimates of $66.64 billion
  • Google Cloud revenue $5.54 billion, +45% y/y, beating estimates of $5.42 billion
  • Other Bets revenue $181 million, -7.7% y/y, beating estimates of $209.6 million
• Operating income $21.89 billion, +40% y/y, beating estimates of $21.16 billion
  • Google Services operating income $25.99 billion, +36% y/y, beating the estimate of $24.26 billion
  • Google Cloud operating loss $890 million, -28% y/y, estimate loss $820.9 million
  • Other Bets operating loss $1.45 billion, +28% y/y, beating the estimate loss $1.32 billion
• Operating margin 29% vs. 28% y/y, beating the estimate 28.8%
• Capital expenditure $6.38 billion, below the estimate $7.42 billion

Net income of $20.6 billion makes Q4 2021 a record quarter for profit. And visually:

Commenting on the quarter, CEO Sundar Pichai said that “our deep investment in AI technologies continues to drive extraordinary and helpful experiences for people and businesses, across our most important products. Q4 saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our Cloud business continuing to grow strongly.”

CFO Ruth Porat said that the success this quarter was due to strong consumer activity online and advertising spending:“our fourth quarter revenues of $75 billion, up 32% year over year, reflected broad-based strength in advertiser spend and strong consumer online activity, as well as substantial ongoing revenue growth from Google Cloud. Our investments have helped us drive this growth by delivering the services that people, our partners and businesses need, and we continue to invest in long-term opportunities.”

Alas, don't expect her to give any official guidance, that said as Bloomberg adds, "analysts will be keen to hear color on what she expects the current quarters to bring."

The company's gains were driven by the core advertising business, which has benefited from continued growth in commerce, especially during the lockdown. Curiously, the big beat did not come from YouTube, as everyone was expecting. Expect to hear more about this on the call - how much room there is when it comes to monetization and whether it’s negatively exposed to reopenings.

According to a recent Morgan Stanley survey, Google’s e-commerce strategy has gained more traction, finding that Amazon customers were increasingly starting their shopping searches on Google. And indeed, with the $43 billion in revenue the Search business generated last quarter -- trouncing the very strong $32 billion from a year earlier -- there must be some truth to the idea that the shopping strategy is paying off.

As Bloomberg notes, a somewhat unexpected bright spot in the report is Google’s ad tech business, called “Google Network.” It connects ad buyers to websites, and its stronger-than-expected $9.3 billion in revenue shows that demand remains strong to advertise across the web.

Google also recently made a change so that the highest bid wins ad auctions rather than the second-highest bid. It said at the time this might mean more money to publishers.

Unlike last quarter when investors were disappointed by Cloud, this time the Cloud narrowly beat Wall Street’s estimates, in another sign that the division’s growth is robust and predictable. Cloud generated revenue of $5.54 billion, up +45% y/y and beating estimates of $5.42 billion; This however translated into a cloud operating loss of $890 million, worse than the consensus estimate of $820.9 million. The lack of profit shows that while Cloud is growing, it is still not accelerating fast enough to overtake Amazon or Microsoft anytime soon.

The one potential weakness was YouTube, where ad revenue fell short of analyst estimates. The video site’s ad business is thought of as more costly to maintain and difficult to grow than the company’s Search-ads business.

Unlike some of its gigatech peers, Google generated profit in just one division: consumer services, which was the only one that made money (Cloud lost $890 million, Other Bets, including Waymo self-driving cars and Verily, which focuses on health-care tech, lost $1.45 billion -- a wider loss than a year earlier). CFO Porat has been mum on when exactly these companies might be spun off.

Alphabet disclosed that it now has 156,500 direct employees. (It has an undisclosed number of contract and temp employees.) At the end of 2018, the company had less than 100,000 full-time staff.

But the kicker for investors was that Alphabet approved a 20-for-one stock split, and as part of the stock split, the company will give $0.001 for each share of the company’s Class A stock, Class B stock and Class C stock. 

It appears that GOOGL is going after the reddit crowd: this is how CFO Porat explained the stock split: "The reason for the split is it makes our shares more accessible. We thought it made sense to do; the timing is to increase the number of authorized shares."

In kneejerk reaction, GOOGL stock is surging some 7% after hours, and is pushing not just its immediate advertising peers Snap, Pinterest, Meta, and Twitter higher, but is lifting the entire Nasdaq.

Tyler Durden Tue, 02/01/2022 - 16:25
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Alphabet Explodes 7% Higher After Beating Estimates Across The Board, 20-For-One Stock Split

Cartels Have Operational Control Of US Border, Are "Terrorizing" The US, Says Rep. Chip Roy

Submitted by Charlotte Cuthbertson and Steve Lance of The Epoch Times

Mexican cartels are making billions of dollars from drug trafficking, human smuggling, and exploiting the U.S. border, said Rep. Chip Roy (R-Texas).

Rep. Chip Roy (R-Texas) speaks at a news conference at the U.S. Capitol in Washington on September 22, 2021.

Border Patrol agents apprehended more than 1.3 million illegal immigrants crossing into Texas from Mexico in 2021. Hundreds of thousands more weren’t captured. Seizures of the deadly synthetic opioid, fentanyl, have sharply increased, as have overdose deaths in the United States.

“We have 100,000 Americans die from opioid poisonings. They’re not really overdoses—they’re poisonings,” Roy told NTD’s Capitol Report on Jan. 28.

“China is moving it through Mexico, cartels are making money, China is getting empowered, America’s getting hammered—all because this administration refuses to do its job of securing the border.”

The chemicals to make fentanyl are produced in China and shipped to Mexico, where counterfeit pills are manufactured, heroin is spiked, and other products are laced before being sent across the southern border.

U.S. Customs and Border Protection reported a 1,066 percent increase in fentanyl seized at south Texas ports of entry during fiscal year 2021.

Heroin and fentanyl pressed into pill form. (DEA)

The cartels, which fight over the lucrative territory that abuts the United States, have expanded their reach, profits, and power through a massive increase in human smuggling and trafficking over the past year.

They often send large groups through in one area of the border to tie up Border Patrol resources, which leaves nearby areas unpatrolled and open for illicit transport, said Rodney Scott, former U.S. Border Patrol Chief.

“They simply overwhelm agents with those massive numbers, and that creates other areas where there’s no law enforcement at all,” Scott told Capitol Report on Dec. 16.

“That’s where they’re bringing the narcotics, the criminal aliens, the people that want to avoid arrest, for whatever reason, and they’re just pouring across at will. This is a crisis and it is real.”

Border Patrol agents apprehend and transport illegal immigrants who have just crossed the river into La Joya, Texas, on Nov. 17, 2021.

Illegal immigrants have to pay a cartel to cross into the United States, and the amount varies on the country of origin and the destination in the United States. Often, the illegal immigrant doesn’t have the money and will enter the United States indebted to the cartel.

“These are human beings. They are put into the labor or sex trafficking trade and they’re basically held as slaves to enrich the worst elements of our society—cartels, but also just illegal illicit organizations that are perfectly happy to use the cartel network to get the people that they’re going to abuse. It’s absolutely horrific,” Roy said.

“One boy thought he was paying $4,000 to go pick grapes in California. Instead he was going to be held for ransom in a stash house in Houston.”

Recently, eight illegal immigrants were discovered in a vehicle in Boerne, Texas, just north of San Antonio.

“The driver of the car was an American citizen employee of one of those cartels, moving those eight people—two of whom were bound in the trunk—heading to a stash house in Houston,” Roy said.

“How is the most powerful nation in the history of the world allowing our borders to be operationally controlled by cartels, while Democrats pat themselves on the back for compassion, using asylum as an excuse for wide open borders that do nothing good for the American people?”

A Border Patrol agent picks up three illegal aliens after Texas state troopers arrested two U.S. citizen smugglers who were transporting them to San Antonio, in Kinney County, Texas, on Oct. 20, 2021.

Roy has introduced a bill that seeks to designate two cartels as terrorist organizations in the last two congressional legislative sessions.

The bill directs the State Department to designate the Reynosa/Los Metros faction of the Gulf Cartel and the Cartel Del Noreste faction of Los Zetas as foreign terrorist organizations. It also requires the state department to produce a report on those cartels, as well as any others that meet the criteria.

The bill has the support of 45 co-sponsors, all Republicans. But he’s not confident it will get passed during Biden’s administration.

“They don’t give a rat’s rear end about securing the border or trying to go after cartels,” Roy said. But the bill also faces opposition from some Republicans.

“You have some Republicans who hand-wring and go, ‘Well, you can’t call them cartels, because you elevate them to something that’s the same as the Taliban, or Al-Qaeda, or ISIS,” Roy said.

“But to me, they are terrorizing the United States, they’re terrorizing people in Mexico. They’re doing it purposely, they’re doing it for political power, they’re doing it to enrich themselves.

“They hang people, they bury people alive. They kill people and send videos to their families, so that they can terrorize people.”

Roy said the United States needs to go after the cartels and reclaim operational control of the southern border.

Meanwhile, he’s preparing to impeach Department of Homeland Security Secretary Alejandro Mayorkas for dereliction of duty.

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Cartels Have Operational Control Of US Border, Are "Terrorizing" The US, Says Rep. Chip Roy

Arctic Blast Puts Texas' Power Grid At Risk

U.S. natural gas futures have risen for the seventh day on prospects of another winter storm and colder weather for the U.S. There are emerging concerns Texas' power grid could be tested again amid a cold snap. 

Futures for March delivery were up at 4.5%, or about .21 cents to $4.87/MMBtu (as of Monday morning). Prices have advanced for the seventh consecutive day, retracing 61.8% of the down move from early October high to the low in late December. The squeeze in natgas comes as weather models have recently shifted to colder outlooks.

Average temperatures across the U.S. have been hovering below a 30-year mean for the second half of January are expected to remain below normal through the first half of February. 

Cold weather for the U.S. has boosted heating demand, as shown in heating degree days well above a 30-year average. 

Shifting our attention to the south, average temperatures are expected to dive below freezing in Texas this week. In the Permian Basin, the largest shale-producing region in the U.S., temperatures will plunge to 15 degrees Fahrenheit on Wednesday. The cold snap will spread across the eastern half of Texas, with temperatures diving well below 32 degrees in Dallas, San Antonio, and Houston this week. 

"There is going to be a pretty solid push of Arctic air into the southern high plains," said Rich Otto, a forecaster at the U.S. Weather Prediction Center.

The problem we see is the primary grid operator for Texas, the Electric Reliability Council of Texas (ERCOT), could run into trouble as bitterly cold weather may disrupt natgas to power plants.  

BloombergNEF data based on pipeline flows show there have already been two instances where pipeline flows dipped due to cold weather this month. 

Gas wells are particularly susceptible to freeze-off, though Otto said this week's cold spell wouldn't be as severe as the one in February 2021 that nearly collapsed the state's entire power grid. 

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Arctic Blast Puts Texas' Power Grid At Risk

Unmasked Students Face Immediate Suspension From Loudoun County Public Schools

Submitted By Terri Wu of The Epoch Times,

Refusal to wear a mask in school will result in immediate suspension, effective Feb. 2, a school principal in the Loudoun County Public Schools (LCPS) district in Virginia told unmasked students last week.

Unmasked students were kept in the auditorium at Woodgrove High School in Purcellville, Va., on Jan. 24, 2022.

William Shipp, principal of Woodgrove High School, spoke at about 3:45 p.m. local time on Jan. 28 to unmasked students assembled in the school’s auxiliary gym.

“You have all chosen not to wear a mask this week. Essentially, that is just defiant of the rules Loudoun County Public Schools have put up,” Shipp said in a video reviewed by The Epoch Times.

He told the students that they would face immediate suspension starting from the next school day on Feb. 2 if they walked into the school without wearing a mask; the suspension wouldn’t end until the students started wearing masks, he added.

In response to a student’s question whether the suspension was legal, Shipp referred to Loudoun County school board policy and affirmed, “At this point, there is suspension.” He also said there was an appeal process to follow. During the suspension, students can still use Schoology, the virtual learning platform, to continue their studies, according to Shipp.

Caroline and Laura Thomas’s letters from Woodgrove High School were identical except for student ID and other personal information. Any students “who willfully continue to refuse to follow COVID mitigation measures as required by Loudoun County Public Schools will be suspended from school” for “disobedience” and “defiance,” according to the letters.

Clint Thomas, the students’ father, questioned the “double standard.” While the school district cited the Virginia Department of Health’s (VDH) interim Guidance for COVID-19 Prevention in Pre-K–12 Schools under Democratic Gov. Ralph Northam, it has declined to follow VDH’s updated guidance under Republican Gov. Glenn Youngkin, who was inaugurated on Jan. 15.

VDH’s updated guidance for Pre-K–12 schools states the roles and responsibilities among parents, schools, and public health institutions. The decision of masking and vaccinating lies with parents.

Clint Thomas told The Epoch Times that the reason for the suspension was “not masking” but “defiance.”

“[Principal Shipp] is pushing them to wear a mask so he doesn’t have to suspend them,” he said.

LCPS is one of the districts in the state that have decided to keep the mask mandate, despite Youngkin’s executive order that gave the masking decision to parents. Virginia has more than 130 school districts, with about 50 following the same course as Loudoun County.

Unmasked students taking lunch in the auxiliary gym at Woodgrove High School in Purcellville, Va., from Jan. 25 to Jan. 28, 2022. A “no mask area” check-in sheet with a QR code is on the table

‘Every Day Felt Like a Prison’

Madison Dunbar, a sophomore at Woodgrove who also was unmasked in school last week, told The Epoch Times that it’s ridiculous for LCPS to force students to choose between masking and in-person learning.

Her younger siblings Hailey and Zack attend Harmony Middle School. The letter from Harmony states: “A student who is suspended because of non-compliance with COVID-mitigation measures may return to school only when they agree to follow COVID-mitigation measures throughout the entire school day and at all indoor school-related events. Suspension will continue if COVID-mitigation measures are not followed.”

Kayla, an 11th-grader at Woodgrove, also didn’t wear a mask to school. During the week, she repeatedly asked teachers and administrators, “Where is my in-person learning?” She said the educators simply referred to Schoology, LCPS’s virtual learning platform.

Kayla, as well as Caroline and Laura Thomas, said that starting on Jan. 25, unmasked students had to use a back door to exit the school several minutes earlier than masked students. In addition, the unmasked students were made to enter the school through the main entrance and walk past masked students in the morning to go to their separate location.

She said that she felt that the unmasked students were being shamed. For example, the auxiliary gym they were sent to from Jan. 25 to Jan. 28 had an uncovered window.

“The masked kids would just sit there and take pictures of us, and laugh at us, every day,” she told The Epoch Times.

Caroline Thomas, who has compiled a daily journal of her experience, also wrote about the separate exit. She noted that she didn’t get an answer when asked why she had to leave the school from a different exit than masked students.

“I’m sure it’s because they didn’t want us to ‘infect’ the rest of the school,” she wrote.

“Every day felt like a prison. Each day gets crazier and crazier.”

Caroline Thomas is on the Woodgrove High School soccer team and the captain of her travel soccer team. (Courtesy of Clint Thomas)

Emma, Kayla’s younger sister and a 9th-grader at Woodgrove, told The Epoch Times: “Teachers really didn’t care about our education. They just brushed it under the rug like we didn’t need to learn.”

Kayla’s mother, Joy, who prefers not to disclose the family name, said: “Kayla was having trouble sleeping. She was having trouble eating. The entire week, [they were] more stressed out than I have ever seen either of my girls.

“They were trying to do the right thing but kind of caught in the middle. They want to follow what they’re told to do but want to hold their ground because they know their freedoms.”

All of the Woodgrove girls who were interviewed noted that on Jan. 28, the number of unmasked students was more than 50, the highest number for the week. According to Erin Dunbar, Hailey, and Zack’s mother, the number of unmasked students in Harmony Middle School topped 20 on the last day of the week.

LCPS spokesperson Wayde Byard said that he had no comment when contacted by The Epoch Times about the suspension plan and VDH’s updated guidance.

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Unmasked Students Face Immediate Suspension From Loudoun County Public Schools

US Charged With Trying To Provoke Russian Military Action At UN: "You Want It To Happen"

At a rare UN Security Council debate Monday, which was urged by the US but slammed by Russia as a publicity stunt - in order for Moscow to "explain itself" over what Washington has for weeks asserted are "imminent" plans to "invade" Ukraine - Russia's ambassador charged the US with seeking to provoke Russian action. 

"They themselves are whipping up tensions and rhetoric and are provoking escalation," Russian Ambassador Vassily Nebenzia said of US and NATO motives. "The discussions about a threat of war is provocative in and of itself. You are almost calling for this. You want it to happen. You're waiting for it to happen."

Russia's ambassador to the UN, via Atlantic Council

Just prior to the meeting at UN headquarters in New York, the Kremlin once again charged the US and and some allies, especially Britain, of stoking "hysteria": "To our dismay, American media have lately been publishing a very large amount of unverified, distorted and deliberately deceitful information about what's happening in Ukraine and around it," Kremlin spokesman Dmitry Peskov said.

"Hysteria hyped up by Washington is causing hysteria in Ukraine, almost to the point that people are packing their bags for the front. It's a fact," he added. Last week Ukrainian leaders surprisingly made similar statements, seeking to calm their own population amid reports of people raiding grocery stores and taking out all their cash from banks. There have also been reports that average Ukrainians are stockpiling weapons in preparation for a Russian onslaught and occupation.

During the UN back-and-forth, US Ambassador Linda Thomas-Greenfield accused Russia of not just building up forces near the Ukrainian border, but of a massive force build-up in Belarus. She said Russia aims to send at least 30,000 troops to its closest former Soviet satellite state ally:

After placing some 5,000 troops in Belarus, "we've seen evidence that Russia intends to expand that presence to more than 30,000 troops near the Belarus border" with Ukraine by early February, US Ambassador Linda Thomas-Greenfield told the UN Security Council, noting the forces would be "less than two hours north of Kyiv."

Her words had echoes of recent admin officials who bizarrely claimed (without evidence) that Russia is looking to invade and take over the Ukraine capital. During the remarks, Thomas-Greenfield decried what she described as "the largest... mobilization of troops in Europe in decades."

"You heard from our Russian colleagues that we're calling for this meeting to make you all feel uncomfortable. Imagine how uncomfortable you would be if you had 100,000 troops sitting on your border in the way that these troops are sitting on the border with Ukraine," she said. "This is not about antics. It's not about rhetoric. It's not about 'U.S. and Russia.' What this is about is the peace and security of one of our member states."

Lavrov: "There is still a small group of people who stand to benefit" from war in Ukraine pic.twitter.com/fQzCbutPGc

— Clint Ehrlich (@ClintEhrlich) January 31, 2022

Addressing the specific Russian charge that it's actually the US seeking to provoke, she responded, "I cannot let the false equivalency go unchecked, so I feel I must respond. ... The threats of aggression on the border of Ukraine - yes on its border - is provocative. Our recognition of the facts on the ground is not provocative."

Notably backing Russia was its powerful neighbor to the south, China:

In a sign of their increasing alignment, China was the only country to back Russia's effort to squash the public meeting. Its ambassador Zhang Jun said they oppose "microphone diplomacy of public confrontation" and believed the open discussion of the issue would add "fuel to the tension."

#China @ChinaAmbUN does not support an open meeting on #Ukraine. 🇺🇦 “This is the time for quiet diplomacy.” pic.twitter.com/az8CAl3EeS

— Lenka White (@white_lenka) January 31, 2022

Monday's UNSC meeting didn't result in any specific action or even a joint statement, but appeared geared toward making each side's allegations official before the global body.

Separately on Monday, President Biden addressed the ongoing crisis, saying, "We continue to urge diplomacy as the best way forward, but with Russia continuing its buildup of its forces around Ukraine, we are ready no matter what happens."

 "I had a productive talk last week with President Zelenskyy, and we continue engage in non-stop diplomacy," he added, but stressed the US would remain "ready" to act.

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US Charged With Trying To Provoke Russian Military Action At UN: "You Want It To Happen"