Economy

Google drops 7% on revenue miss due to fizzling ad business

Google drops 7% on revenue miss due to fizzling ad business

Google parent Alphabet on Monday reported that profit in the first three months of this year sagged under the weight of a hefty antitrust fine in the European Union. Excluding the fine, Alphabet's net income was $8.4 billion-still lower than its net profit of $9.4 billion in the same quarter a year ago. Excluding the EC fine, Alphabet said earnings were $11.90 per share. Mobile search and YouTube were substantially responsible for revenue growth, which was up 17 percent year-over-year.

"Nearly half of ad budgets in the USA are still spent offline, 90 percent of commerce in the U.S.is offline, and we are focused on digital playing a big role in that", Porat said. Accounting for traffic acquisition costs, Alphabet generated revenue of $29.5 billion.

The rate of growth in "paid clicks" - Alphabet charges companies every time their ad is clicked on - also decelerated to 39% growth versus 59% at the beginning of 2018.

The California giant showed widening losses for its "other bets" including the Waymo self-driving auto project, Verily life sciences and services for internet for remote parts of the world and drone delivery. That's down from 85.5% a year ago. Waymo has begun a limited rollout of its robotaxis in Arizona in partnership with automakers. And it pointed to the success of Google Assistant-enabled smart home devices.

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Amazon's ad business, which is combined in an "advertising and other sales" segment, brought in $2.7 billion in the first quarter, less than one-tenth of Google's ad sales. So, weakness in revenue growth may prove somewhat temporary, as Alphabet's dominant position in Search and various other categories like Video via YouTube results in organic ad-inventory growth along with pricing improvements. Along with Facebook, it commands the lion's share of digital advertising and possibly all of its growth in aggregate versus the other players. Sales of Google's Pixel phones also struggled amid intense competition in the premium smartphone market, she said. Something similar happened to Facebook, which saw its stock go up by 4% on its Q1 earnings report despite a warning that it may have to pay as much as $5 billion to settle an ongoing FTC investigation.

Microsoft also had impressive first-quarter results, beating sales and profit expectations and becoming the third listed United States firm to be valued at $1tn.

Brussels accused Google of using the Android system's dominance of smartphones and tablets to promote the use of its own Google search engine and Chrome browser and shut out rivals.


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