Facebook vs Alphabet operating margin

on Jul27

Ruth Porat, CFO of Alphabet, at the 2017 Code Conference on May 31, 2017.

Asa Mathat | ReCode

Ruth Porat, CFO of Alphabet, at the 2017 Code Conference on May 31, 2017.

Wehner warned analysts on a conference call late Wednesday that the company’s expenses would be higher later this year — even as he lowered the full-year expense forecast range to 40 to 45 percent from 40 to 50 percent.

“I would note that we expect to accelerate our head count growth rate in the second half of the year, as we remain solidly in investment mode. We also expect that our video content investments will contribute to operating expense growth in the second half of 2017,” Wehner said in his prepared remarks.

And by another financial metric, Porat did a better job than Wehner in the second quarter.

Operating expenses for Alphabet (again excluding the fine) rose 23 percent from a year earlier, while Facebook’s jumped 33 percent.

That performance should help bolster Porat’s reputation on Wall Street as the executive who is reining in spending on Google’s more experimental businesses.

It also helps further explain what Porat meant when she said on her conference call with analysts late Monday that Alphabet was focused on dollar growth in revenue and operating income, rather than margins.

Since Porat joined Google (now Alphabet) on May 26, 2015, its shares have surged 76 percent, far more than the broader market for tech stocks, as measured by the Nasdaq Composite Index. By way of comparison, since Wehner took over as Facebook CFO in June 2014, Facebook shares are up 150 percent.

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