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Alphabet Misses Analyst Expectations Despite Pixel Sales

Alphabet’s earnings report for the final quarter of 2016 saw the company report lower than expected profit growth of 8.3%.

Meanwhile quarterly revenue surpassed analyst estimates, increasing by 22% driven mostly by Alphabet’s advertising business. As part of the company’s plans to diversify, advertising accounts for 85.9% of revenue in the fourth quarter, down from 89.4% a year ago.

New hardware from Google performed strongly during the holiday season according to Google executives, with the Pixel and Google Home both reportedly selling well. Alphabet reported a surge in non-advertising revenue in the fourth quarter, up 62% from 2015 to $3.4 billion.

“We’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets,” said Ruth Porat, CFO of Alphabet.

‘Other Bets’ remains an expensive division for Alphabet, but a decrease in losses and increased revenue have been touted by the company as a positive sign for the future.

Made up of a wide range of efforts including self-driving car technology ‘Waymo’ and Nest smart home products, the Other Bets division lost $1.08 billion in the fourth quarter, compared to $1.21 billion the year prior.

Revenue for Other Bets increased from $150 million in the last quarter of 2015 to $262 million a year later, driven by a doubling of sales for Nest products during the holiday season, along with Google Fiber internet subscriptions and the Verily life sciences division.

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