Alphabet posts lower Q4 profits amid tight advertising, competition

Alphabet posts lower Q4 profits amid tight advertising, competition

On this February 14, 2018, an image file of the Alphabet logo appears on screen at the Nasdaq MarketSite in New York. Alphabet Inc. financial earnings report for Thursday, February 2, 2023. Credit: AP Photo/Richard Drew, File

Google’s parent company, Alphabet, on Thursday posted lower profits and a slight increase in revenue for the fourth quarter of last year, as falling online ad spending and competition from rivals weighed on the giant. giant search.

While total revenue grew, ad revenue fell nearly 4%, and revenue at YouTube fell 8% year-over-year. That seemed to spook investors, who sent the company’s shares lower in after-hours trading.

The Mountain View, California-based company said it made $13.62 billion, or $1.05 per share, for the October-December quarter. % compared to $20.64 billion, or $1.53 per share, in the same period last year.

Revenue inched 1% higher to $76.05 billion from $75.33 billion.

Analysts expect Alphabet to post earnings of $1.18 per share on revenue of $76.2 billion for the period, according to FactSet Research.

Alphabet, like Facebook mother Meta, Amazon and other technology companyare going through tough economic times that are particularly damaging for the online advertising market.

Last month, Alphabet announced it was cutting 12,000 jobs, or about 6% of its workforce. It was the company’s biggest layoff and in addition to tens of thousands of other job losses recently announced by Microsoft, Amazon, Meta and other tech companies are tightening their belts against the dark prospect of the industry.

In response to the layoffs, Google union workers, members of the Alphabet Workers Union-CWA, rallied outside the company’s New York City office on an earnings call. of the company.

“Alphabet is one of the most profitable companies in the world and is well-positioned to weather any economic storm. However, our executives have decided instead to lay off 12,000 of our colleagues, many of whom work in the medical or healthcare sector. parental leaveas well as many with more than a decade of loyal service,” the union said in a statement.

Alphabet is facing a “challenge” economic environment and is working to restructure its cost structure to build “financially sustainable, vibrant businesses” across the company, said CEO Sundar Pichai.

“Our long-term investments in deep computer science put us extremely well when AI reaches an inflection point, and I am excited by the AI-powered leaps we are making,” says Pichai. I’m about to announce in search and beyond.” declare.

Google is facing some competition in artificial intelligence from Microsoft, which last month announced it as make a “multi-year, multi-billion dollar investment” in the artificial intelligence startup OpenAI, maker of the hugely popular ChatGPT and other tools that can write readable text and create new images.

This technology could help Microsoft’s own search engine, Bing, compete with Google in answering search queries with more complete answers than just links.

Pichai also touted “big momentum” in the Cloud, YouTube subscriptions, and Pixel devices, signaling to investors that Alphabet has multiple revenue streams beyond advertising to grow its business.

However, advertising still makes up the majority of Alphabet’s revenue. revenue.

In addition to economic pressure, Google is also facing regulatory pressure. Last month, the Department of Justice and eight states filed an antitrust lawsuit against Googleseeks to circumvent its alleged monopoly over the entire online advertising ecosystem as a painful burden on advertisers, consumers, and even the US government.

In the complaint, the government alleges that Google is seeking to “disable or eliminate” competitors in the online advertising market through acquisitions and forcing advertisers to use their products by way of making it difficult to use a competitor’s services.

Shares of Alphabet Inc. fell about 4% in extended trading after the company’s earnings report was released.

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