Sat, Jul 27, 2019 - Page 10 News List

Alphabet shares soar as revenue beats estimates

Reuters

Alphabet Inc reported quarterly revenue and earnings that beat expectations on Thursday, easing concerns about the short-term growth challenges facing Google, YouTube and the company’s other advertising businesses even as it faces antitrust investigations.

Revenue rose 19 percent to US$38.94 billion, compared with average estimates for 16.82 percent growth and US$38.15 billion in revenue among financial analysts tracked by Refinitiv.

Shares rose nearly 8 percent to US$1,225 following the results in after-hours trade, after closing little-changed in regular NASDAQ trade.

The results brought Alphabet closer to the 20 percent revenue growth it had generated for several years before posting 17 percent growth in the first quarter this year, which sent shares falling.

Alphabet generates about 85 percent of its revenue from tools used in online advertising or the ad space itself.

In the first quarter, executives said that results were affected by exchange rates for foreign currency, competition and an unspecified product change that had boosted results a year earlier.

During the second quarter, Google announced several new advertising tools, including ads on the home page of its Google mobile app, as well as new types of ad campaigns spanning YouTube and Gmail.

The second-quarter results showed greater revenue than analysts had anticipated from Google’s advertising and non-advertising businesses.

Ad clicks on Google’s properties rose 6 percent compared with the first quarter, when they had fallen 9 percent.

The number of ads shown on Web sites and apps with which Google partners held steady compared with last quarter.

At US$29.764 billion, Alphabet’s quarterly costs were about flat with the same period a year earlier. Alphabet last year began spending more on hiring for its cloud computing division, acquiring and policing content, developing artificial intelligence capabilities and adding facilities.

The second-quarter operating margin was 24 percent, up from 18 percent in the first quarter.

Net income for the second quarter rose to US$9.95 billion, or US$14.21 per share, from US$3.2 billion, or US$4.54 per share, a year earlier, when it recorded a US$5 billion charge related to a fine by European antitrust regulators for abusing its dominance in mobile software.

Analysts’ average estimate for quarterly net income was US$8.024 billion, or US$11.32 per share.

Shares of the company have lagged its peers this year, rising about 10 percent, compared with about 20 percent growth for the S&P 500 members broadly.

Intensifying regulatory scrutiny has been a major concern for investors, financial analysts say.

On Thursday, the Texas attorney general’s office announced that a bipartisan group of state attorneys general is weighing a range of antitrust actions against big tech companies.

Reuters reported last month that the US Federal Trade Commission was gearing up to investigate Google over complaints of anti-competitive behavior.

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