Alphabet (Buy, $1,025 PO) Stock view: Expect solid 1Q revs., but loss of non-GAAP reconciliation a concern New concerns have been raised on the YouTube advertiser pullback, but with the cuts in spending surfacing primarily in the back half of March, we anticipate only modest impact to 1Q revenue, with more significant potential impact to 2Q17 (see Advertiser boycott raising concerns on 10/20 revenues). Looking beyond the YouTube issues, our early 1Q ad checks were mostly positive, with Merkle highlighting modest revenue growth acceleration, better than the 7Obps of ex-FX Website revenue deceleration in 1Q17 (vs 4Q16) we’ve assumed in our model. Overall, we expect in-line to slightly better 1Q results driven by mobile and PLA strength (and perhaps some maps ads), but see risk of moderate Street estimate cuts for 2Q/3Q revenue on YouTube concerns. For most companies, we would expect management to help clear up the advertiser controversy on the call with some added financial disclosure or guidance, but predicting what Alphabet will say on the topic is more difficult. 1Q results will be the first quarter that Google reports GAAP EPS without a non-GAAP EPS reconciliation. With higher than usual SBC in 1Q due to changes in grant timing, it is possible Google misses Street GAAP EPS. We are leaving our revenue unchanged but lowering GAAP EPS to $7.26 from $7.36 based on higher SBC. Also, unusual charges are more likely to be controversial for Google without a non-GAAP EPS reconciliation. Core margins remain a key focus, as has been the case since 3Q16 when core Google non-GAAP operating margins contracted 95bps y/y. We expect core margins to remain down y/y driven primarily by segment mix, and our model assumes 2017 core margins are down 50bps in 2017 (to 46.1%) and another 20bps in 2018 (to 45.9%). For 1Q17, we assume 45.8% core Google non-GAAP operating margin, up 30bps q/q and down 75bps y/y. Our recent deep dive analysis suggests segment mix alone drives a natural 220bp