Alphabet Surprises With $5 Bln Share Buyback Program

Alphabet Inc, the new parent company for the search engine giant Google, introduced its first share buyback and surpassed Wall Street's profit forecast on Thursday, Reuters reported.

Alphabet said it earned an adjusted $7.35 per share on revenue of $18.68 billion as compared to analysts’ expectation of $7.21 earnings per share and $18.54 billion in revenue. With revenue and profit moving beyond analysts' average forecasts, and unexpected announcement of buyback - the first time it has given cash back to shareholders, Wall Street expects the company to grow further.

"They're in a great position in the overall advertising space, whether it's search, display or mobile," said Kerry Rice, a Needham & Co analyst. "They've got the right program to continue to grow at a solid pace and be dominant in those spaces."

The tech giant also said that its board authorized $5 billion in share buybacks of its Class C capital stock. The announcement sent its shares up 10 percent in after-hours trading.

That said, the actual size of the buyback is $5,099,019,513.59 – an interesting number of course, but reason behind this figure is that it is the square root of 26 (with the decimal point moved way to the right) and it’s a no brainer to say that there are 26 letters in English alphabets. Google seems to be having a little fun with numbers.

Forbes reported that the $5 billion buyback comes from Alphabet’s huge $73 billion cash pile. However, it does not mean that it will slow down its M&A activities, the company said.