'Big bets' cost Alphabet $3.6B in losses in 2015

Google self driving car

A Google self-driving car navigates streets near the company's headquarters in Mountain View, California, on June 29, 2015.

Credit: Martyn Williams

The losses were more than offset by its core search and advertising businesses

Alphabet, the parent company of Google, racked up $3.6 billion in losses last year through investments in "big bets" such as self-driving cars and Internet balloons.

The company was known to be spending heavily on these items but revealed actual figures for the first time Monday when it broke out results separately for its core Google business and for big-bet investments, which it also calls moonshots.

The losses for those items were much higher in 2015 than in 2014, when they totaled $1.9 billion. And they brought in just $448 million in revenue last year.

Still, Alphabet says it stands to reap rich rewards in the long term if any of those big bets pays off. They also include its investments in smart thermostat company Nest, Google Fiber, and medical science, including efforts to build a smart contact lens that measures glucose levels.

The losses were more than offset by the profits Google made from its core businesses in advertising and search. Google generated $23.4 billion in operating income last year, on $74.5 billion in revenue.

Google reorganized itself last year under a holding company called Alphabet, which consists of Google -- its core search and advertising businesses -- and then other business units that place long term bets on emerging areas. It said the move would provide more visibility into how its core search and ad businesses are doing.

Alphabet as a whole reported strong results for last quarter. Revenue for the three months to Dec. 31 was $21.3 billion, up 18 percent from the year before and higher than the $20.8 billion analysts had been expecting, according to a poll by Thomson Reuters.

Net profit for the quarter rose to $4.9 billion. On an adjusted basis, net earnings per share was $8.67, up 28 percent and much better than the $8.10 analysts had forecast.

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