• News
  • Sport
  • TV
  • Radio
  • Education
  • TV Licences
  • Contact Us
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • FEATURES
  • OPINION
No Result
View All Result
1
Home Business

Alphabet Inc shares dive as YouTube changes

30 April 2019, 6:07 AM  |
Reuters Reuters |  @SABCNews
The Google logo is pictured at the entrance to the Google offices in London

Alphabet has yet to tout significant revenue from its spending on ventures such as self-driving cars and its AI helper Google Assistant.

The Google logo is pictured at the entrance to the Google offices in London

Image: Reuters

Alphabet has yet to tout significant revenue from its spending on ventures such as self-driving cars and its AI helper Google Assistant.

Alphabet Inc’s Google on Monday saw its slowest revenue growth in three years from increased competition in advertising, stumbles in its smartphone business and disruptive changes at YouTube that left the leading internet ad company lagging rivals.

Shares of Alphabet dropped 7.5% after hours, setting them up for the biggest one-day drop since falling 8 percent in October 2012. They had closed Monday at a record-high of $1,296.20.

Alphabet Chief Financial Officer Ruth Porat attributed slower revenue growth to currency fluctuations, competition and unspecified product changes.

The company is facing continued pressure from advertisers to tighten controls on its fast-growing YouTube video service so that they not appear to be sponsoring adult or offensive content.

Google also is struggling to find the right mix of ad formats to use on mobile devices, voice assistant-enabled home speakers and in emerging markets.

Eight of the 11 analysts who questioned executives on a call on Monday asked about the revenue issues, an unusual level of shared interest. But the executives offered limited new details, prompting Barclays’ analyst Ross Sandler near the end to preface a question by saying he was just beating a dead horse.

Reflecting on the sales growth slowdown, Porat said unspecified changes at YouTube had boosted first-quarter revenue a year ago, with nothing delivering a comparable bump this year.

About 85% of Alphabet’s revenue comes from Google’s ad business, which sells links, banners and commercials across its own websites and apps and those of partners.

Chief Executive Sundar Pichai said revenue slowdowns should be expected as the company focuses on the long term.

“You are going to have quarter-to-quarter variations once in a while, but we remain confident about the opportunities we see,” he said on a conference call.

Major competitors for ad spending such as Facebook Inc, Snap Inc, Amazon.com Inc and Twitter Inc all reported last week quarterly revenue above or in line with analysts’ expectations.

Alphabet said its quarterly revenue rose 17% from a year ago to $36.3 billion, about $1 billion short of Wall Street’s average estimate, according to IBES data from Refinitiv.

The company said it would have met expectations, adjusting for currency fluctuations.

The growth was the slowest since 17% in the first quarter of 2016 and compared with 26% for the same quarter in 2018.

Facebook, the No. 2 internet ad company, posted 26 percent growth to $15.1 billion in quarterly results last week.

“Google ad revenue growth has been slowing amid downward pressure on ad prices, especially for revenues coming from international markets,” Monica Peart, senior forecasting director for ad research firm eMarketer said in a statement.

RISING COSTS

Alphabet’s quarterly costs rose about the same as revenue, up 16.5% from last year to $29.7 billion.

Expenses have surged faster than revenue for much of the past two years as it adds data centers, offices and YouTube content licenses, concerning some investors amid increased scrutiny on the company’s privacy practices and the advertising restrictions at YouTube.

More advertising controls are coming to YouTube in the coming weeks that could affect sales, Pichai said.

In the first quarter, sales of Google’s Pixel phones also struggled from intense competition in the premium smartphone market, Porat said. The company is expected to introduce lower-priced Pixel devices next month.

Alphabet has yet to tout significant revenue from its spending on ventures such as self-driving cars and its AI helper Google Assistant.

Newer units that are producing noticeable revenue have lagged in market share, including Google’s consolidated hardware unit and Google Cloud, which sells computing and data storage services to businesses.

And Google’s costs could jump further if governments globally follow through on threats to rein in the ability of apps to track users for advertising purposes. Other regulators have discussed forcing companies to step up monitoring of user content. Cost will rise in the current quarter as Google resumes some marketing efforts, Porat said.

Shares of Alphabet have gained 23% this year as positive macroeconomic signals had given investors reason to bet on it. But it is the least growth among the so-called FAANG group, with Facebook at 48%, Netflix at 39%, Apple at 30% and Amazon at 29%.

EUROPEAN FINE

Alphabet’s expenses included a $1.7 billion fine from the European Commission for having placed anti-competitive advertising restrictions on websites using its searches.

Google’s 3 billion users help make it the world’s largest seller of internet ads, capturing nearly a third of all revenue, according to research firm eMarketer. Facebook is at about 20 percent.

Including the European fine, net income was $6.7 billion, or $9.50 per share, compared with analysts’ average estimate of $7.3 billion, or $10.48 per share. Earnings excluding the fine were $8.3 billion, or $11.90 per share, beating analysts’ estimates $10.61 per share for adjusted earnings.

Operating margin excluding the fine was 23%, up from 22% in the year-ago period.

Share article
Tags: Sundar PichaiAmazon.comSnapTwitterFacebookAlphabet IncGoogleYouTube
Previous Post

U.S. film director John Singleton dead at age 51

Next Post

North West man accused of being serial rapist in court

Related Posts

Bobby Rudman and Clive Holiday (driver for the Heritage Train)

Steam trains revived in the Western Cape amid Heritage Day celebrations

24 September 2023, 4:21 PM
An aerial view shows unfinished residential buildings of the Gaotie Wellness City complex in Tongchuan, Shaanxi province, China September 12, 2023.

China’s central bank adviser proposes structural reforms to revive economy

24 September 2023, 12:22 PM
US President Joe Biden steps out of an electric Chevrolet Silverado EV pickup truck being shown to him by General Motors Chief Executive Mary Barra during a visit to the Detroit Auto Show to highlight electric vehicle manufacturing in America, in Detroit, Michigan, U.S., September 14, 2022. REUTERS/Kevin Lamarque/File Photo

Biden to visit Michigan to support auto strike, a day before Trump

23 September 2023, 5:30 PM
Wallet with bank notes and coins.

SA consumers poorer as they navigate tough economic times

23 September 2023, 6:42 AM

Workers hand over memorandum to Seriti Klipspruit Colliery amid retrenchment

22 September 2023, 5:15 PM
Chickens are seen at a poultry farm outside Klerksdorp in the North West province, South Africa, August 15, 2018. Picture taken August 15, 2018.

Avian flu outbreak expected to drive up egg, chicken prices

22 September 2023, 5:00 PM
Next Post
Scales of justice

North West man accused of being serial rapist in court

Most Viewed

  • 24hrs
  • Week
  • Month
  • Concern over exclusion of foreign nationals from Road Accident Fund
  • Cashless taxi service launched in Cape Town
  • “Motsoaledi’s ZEP leave for appeal has no prospects of success”
  • ANC building up in flames in Port St Johns
  • Gqeberha on high-alert following disruptive weather warnings
  • High waves and rough water conditions force beach closures in the Western Cape
  • Prince Mangosuthu Buthelezi to rest in the town he built and nurtured
  • NSPCA files criminal case against Julius Malema for alleged animal cruelty
  • Snow, heavy rainfall expected in parts of KZN: SAWS
  • Cold-front sweeps across SA bringing snow and chilly temperatures
  • A level two weather warning issued for southern KZN
  • Eight killed, several others injured in a head-on collision in Limpopo
  • Western Cape on high alert following severe storm warning
  • Northern Cape motorists urged to drive safely due to poor visibility caused by fires
  • Free State magistrate’s death described as a loss to the legal fraternity

LATEST

Damaging waves, strong winds and severe thunderstorms are expected in certain parts of the Western Cape.
  • South Africa

Buffalo City residents without power due to bad weather


A candle burns in a house on the Cape Flats, due to South Africa's struggling power utility company Eskom, implementing regular power cuts - called 'load-shedding', in Cape Town, South Africa February 11, 2023.
  • Eskom rolling blackouts
  • South Africa

Stage 3 load shedding to be implemented from 8PM


Provincial heritage celebration at Zwigodini, outside Musina in Limpopo.
  • South Africa

Limpopo government says it’s working together to protect nature reserves


[File Image]: ANC flag seen at an event.
  • Politics

ANC branches granted another extension to select candidates for members of legislatures


Formula One driver Lewis Hamilton seen at a Grand Prix.
  • Sport
  • Motorsport

Hamilton says next six months are crucial for Mercedes


Thunderstorm and lightning bolts over a city.
  • South Africa

Western Cape on high alert following severe storm warning


Weather

  • About the SABC
  • Contact Us
  • Jobs
  • Advertise
  • Disclaimer
  • Site Map

SABC © 2023

No Result
View All Result
  • SOUTH AFRICA
  • POLITICS
  • BUSINESS
  • SPORT
  • AFRICA
  • WORLD
  • FEATURES
  • OPINION

© 2023

Previous John Singleton U.S. film director John Singleton dead at age 51
Next Scales of justice North West man accused of being serial rapist in court