Google parent announces stock buyback, modest beat on ad sales
Alphabet Inc.聽said on Tuesday it would buy back $70 billion in听蝉迟辞肠办听and posted first-quarter profit and revenue above estimates as demand rose for cloud services and听补诲听蝉补濒别蝉听held up better than expected.
Investors cheered the听产耻测产补肠办听plan, sending shares of the听骋辞辞驳濒别听辫补谤别苍迟听as much as 4% higher in after-hours trade before they pared gains to trade up 1.6%. Demand rose for cloud services and听骋辞辞驳濒别‘s听补诲听蝉补濒别蝉听held up better than expected.
Alphabet reported a slight dip in first-quarter听补诲听蝉补濒别蝉听from a year earlier to $54.55 billion, which nonetheless听产别补迟听analyst estimates of $53.71 billion. It was the third such decline for the company since it went public in 2004, but was the second in a row following a fourth-quarter听补诲听蝉补濒别蝉听drop of 3.6%.
Excluding items, Alphabet reported earnings per share of $1.17,听产别补迟ing an average estimate of $1.07 per share.
“骋辞辞驳濒别听exceeded both revenue and earnings per share expectations this quarter, but reasons for investor optimism are听尘辞诲别蝉迟,” said Insider Intelligence senior analyst Max Willens.
He said turning a profit in cloud computing was “notable” but “the reality is that听骋辞辞驳濒别听Cloud remains comfortably behind its two most important competitors, and its growth is slowing.”听厂补濒别蝉听for the unit rose to 28% to $7.41 billion.
As well,听补诲vertisers, who contribute the bulk of Alphabet’s听蝉补濒别蝉, have curtailed their spending in response to a shift by consumers back to in-store shopping in the wake of eased masking and other restrictions. Marketers are experimenting more with new platforms like TikTok, which attracts a more youthful audience.
The company, meanwhile, has been looking to keep a tight control on costs amid recession fears and in January decided to cut about 12,000 jobs. Chief Financial Officer Ruth Porat told investors on a conference call that she expected capital expenditures this year to be “modestly higher” than in 2022.
Alphabet has otherwise sought to pare spending, including on employee perks and use of company resources. Porat told workers in an internal email in March that they should anticipate听补诲ditional cost-cutting measures in the coming months.
She said on Tuesday’s call that Alphabet endeavors to “durably engineer our cost base” in order to invest in priorities like cloud computing and artificial intelligence.
础濒辫丑补产别迟鈥檚听骋辞辞驳濒别听unit has been scrambling to keep pace with rivals, notably Microsoft Corp., in rolling out new artificial-intelligence software that can generate long-form responses to queries and other prompts. Microsoft committed $10 billion to OpenAI whose ChatGPT software has been the talk of Silicon Valley since a free version was introduced in November.
Microsoft on Tuesday聽聽Wall Street estimates for third-quarter profit and revenue, driven by growth in its cloud computing and Office productivity software businesses, pushing its shares up 8.5% in after-market trading. Shares of rival tech companies Meta Platforms Inc. and Amazon.com Inc.聽were up 2.3% and 5.3%, respectively.
Alphabet’s revenue for the quarter ended March 31 stood at $69.79 billion compared with estimates of $68.95 billion, according to Refinitiv data.
It reported net profit of $15.05 billion for the first three months of the year compared with $16.44 billion a year earlier. – Reuters
