The tax hit that made Google miss on earnings, and the big compensation change that will keep it from happening again

Alphabet was forced to swallow a $586 million tax charge on the non-GAAP line related to its stock-based compensation.

Alphabet Inc. disappointed investors with its earnings report Thursday because of a charge related to taxes, but Google’s parent company will make an important change to its financial reporting that should prevent this particular pitfall in the future.

Alphabet GOOGL, -1.13% GOOG, -0.92%  reported standard earnings of $7.56 a share Thursday, slightly lower than analyst projections of $7.63 a share, according to FactSet. However, the company’s adjusted profit suffered a much wider miss at $9.36 a share, nearly 30 cents a share lower than analysts’ expectations of $9.64, which was likely a big factor in an after-hours decline for Alphabet stock. READ MORE