The Google Parent Alphabet offers increasing profits, but sales decrease
The Google Parent Alphabet offers increasing profits, but sales decrease
Google parents reported an increase in earnings due to a slightly slower growth in revenue, indicating uncertainty in their core business at a time when they are also facing a growing reaction from regulators and turmoil in their business. own corporate culture.
On Thursday, Alphabet Inc. said net profits rose nearly 37% to $ 9.19 billion in the three months through September, from $ 6.7 billion in the same period last year. That growth exceeded analysts' estimates.
However, overall revenues grew 21% to $ 33.74 billion, compared to a 24% growth in the same period last year. Advertising revenues, which account for the vast majority of sales, increased 20% to $ 28.95 billion.
The results come after a period in which Alphabet lost more than one sixth of its market capitalization in the span of three months. Google's father has been dragged down by a withdrawal from the stock market in October. Its shares reached their lowest point in five months on Wednesday, before rebounding 4.4% on the Thursday before the quarterly report to close at $ 1,097.18. The shares fell more than 3% after the close when the results were issued.
Google has been answering questions from legislators in Washington and Europe since The Wall Street Journal reported earlier this month that the company never told users about a software error That exposed the privacy data of hundreds of thousands of users. That incident led the company to close the consumer functionality of its social Google+ site.
Google has been tormented by internal turmoil over the past year on issues ranging from Your work with the military of the United States. to his plans from China to his management of gender issues in your template.
In a note to employees on Thursday, Google CEO Sundar Pichai said the company has fired 48 staff members for sexual harassment in the past two years, according to a copy of the revised paper by The Wall Street Journal. .
Alphabet had 80,110 full-time employees at the end of last year.
Mr. Pichai's memo came in response to a New York Times story that Google protected three top executives in the last decade after they were accused of sexual misconduct, including one to whom he gave a package Out of $ 90 million when it was in 2014. Google rejected To comment on the details in the history of the Times.
Mr. Pichai said in the note that none of those dismissed in the past two years received an exit package. Google is "very serious in making sure we provide a safe and inclusive workplace," he wrote.
Google said on Thursday that its non-advertising businesses in general grew faster. Sales in its "other" category of revenue, which includes cloud computing services and hardware devices like its Pixel smartphones, increased 29% to $ 4.6 billion compared to $ 3.6 billion.
Growth in Google's main advertising business is still fast for such a large company, but it faces several challenges.
Google is experiencing more competition in its online advertising business than
Amazon.com
Inc.,
which represents a growing number of product searches by US users. UU., Said eMarketer Inc. analyst Andrew Lipsman. It is expected that Google's participation in spending on digital advertising from EE. UU Drop to 37% this year, compared to 39% last year, according to eMarketer. Amazon's share increased to more than 4%, from 2% last year.
And Google has faced rising costs. Their payments to distribution partners accounted for 13.1% of revenues generated by traffic from the company's website, an amount greater than the company spent a year ago and in the second quarter of this year. That figure is closely watched by investors who are worried. Google is buying part of its growth through costly deals with
Apple
Inc.
and others.
Revenues, excluding payments to advertising partners, were $ 27.1 billion, an increase of 22% over the previous year but slightly lower than the $ 27.3 billion forecast by analysts.
The company's capital expenditures grew 49% to $ 5.2 billion as it continues to spend heavily on hiring employees and developing futuristic technologies.
"They are investing all their money to reinforce their dominant position," said Brian Wieser, principal research analyst at Pivotal Research Group. "The question is, are you going to invest in products that sell more ads or build flying cars that might never take off?"
In a call with analysts, Chief Financial Officer Ruth Porat said that most of the increases in capital expenditures were due to the hiring of technical talent, and that the company's cloud computing unit registered the greater increase in personnel.
Mr. Pichai answered questions from analysts about Google's exploration of an expansion in China, which has raised concerns that the company would have to comply with the country's strict Internet censors. The CEO said Google is "constantly looking for ways we can better serve Chinese users," but declined to offer specific details about the plan.
Write to Douglas MacMillan in douglas.macmillan@wsj.com
.
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