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Alphabet misses on earnings expectations, as ad revenue falls

Google Basic Alphabet (google, Google, announced its fourth quarter earnings After the bell on Thursday, revenue and earnings per share fell short of expectations as advertising declined year-over-year.

Here are the most important numbers from the report compared to Wall Street's expectation, compiled by Bloomberg.

Alphabet shares were down 4.2% immediately after the report.

Google's advertising revenue fell from $61.2 billion in Q4 2021 to $59 billion in Q4 2022. Meanwhile, Google Cloud lost $830 million in Q4, which was better than the $1.7 billion it incurred in the same quarter last year.

alphabet, such as meta (meta) and snap (crackle), working to address the slowdown in the digital advertising . Q4 Meta CFO Susan Lee told analysts during the company's recent earnings call that revenue remained under pressure due to weak advertising demand. Meanwhile, Snap CEO Evan Spiegel said ad demand hasn't improved, nor has it gotten much worse.

Microsoft reported weakness in its advertising , CFO Amy Hood pointed out during the company's latest earnings report.

Alphabet's results are its first since the shutdown some 12,000 workers in January, CEO Sundar Pichai blamed the layoffs on Alphabet's employees' decision to meet demand for the company during the pandemic. As people began to return to the real world and rely less on virtual alternatives, however, Alphabet needed to cut staff.

“We have significant work underway to improve all aspects of our cost structure, in support of our investments in our highest growth priorities to deliver long-term, profitable growth,” Alphabet CFO Ruth Porat said in a statement.

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This is the first time since the Department of Justice (DOJ) that Alphabet will report earnings. sued for antitrust against the tech giant over its advertising business. In its complaint, the DOJ says it wants to break up the company's advertising business, which it accuses of operating at the expense of smaller rivals and advertisers.

Alphabet CEO Sundar Pichai announced that the company was laying off 12,000 employees in January. (AP Photo/Eric Risberg)

In a research note, Needham analyst Laura Martin wrote that she expects the matter to take 7 to 10 years to resolve, and that every business decision Alphabet makes in the interim will undergo internal legal review.

“This means destruction of value in addition to legal costs, regardless of the outcome,” she wrote.

However, the DOJ isn't Alphabet's only existential threat. In January, Microsoft (msft) announced that it is a multi-year, multi-billion dollar investment ChatGPT Developer in OpenAI. Microsoft is already talking about adding the company's AI capabilities to its various cloud products, and if it can attach natural language responses to its Bing search engine, it could cut into Google Search's market share. Is.

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Got any tips? Email Danielle Hawley at [email protected] follow him on twitter @DanielHowley,

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