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Google executives trusted Android and other companies, giving investors no sign that an expensive regulatory crackdown in Europe would soon curb sales and profits.
Alphabet's parent company posted second-quarter results that confirmed Wall Street's expectations, CEO Sundar Pichai hinted at new untapped advertising opportunities and highlighted the growth of the YouTube video service and the cloud . Shares jumped up to 6.1% in extended trading, putting them on track for a record.
The monster quarter came about despite a regulatory backlash in Europe, raising questions about Google's massive data collection and conflicts with advertisers over inappropriate content on YouTube. Analysts' statistics outperformed July 23 results.
Alphabet announced two different profits for a record 5 billion US dollars (20.20 billion RM) Europe violated the competition law with Google's mobile Android software last week. Excluding this, Alphabet stated that the profit was US $ 11.75 per share. Google plans to challenge the decision. Even including the record fine, the company generated a net profit of $ 3.2 billion (13.01 billion pounds) in the second quarter.
On the revenue appeal, Pichai suggested that the company would not change its Android strategy dramatically. "I am confident that we can find a way to make sure that Android is available on a scale for users everywhere," he said. Google gives Android to smartphone makers for free, in part because it is the most popular mobile operating system. Pichai's comments suggest that the company will continue the approach.
Google has also ignored the General Data Protection Regulation, a European privacy law that began in May and limits targeted advertising.
"There does not seem to be any sign likely to cause a significant slowdown in the near future, as European Commission fines are not likely to hinder the growth rate of" Alphabet ", writes Brian Wieser, analyst at Pivotal Research Group. a note to investors. "Conversely, regulatory changes such as GDPR in Europe (and similar laws implemented elsewhere) could enhance Alphabet's growth."
Google continued to run ads on mobile phones and bundled more advertising products. together, helping to fuel strong sales growth. Financial Director Ruth Porat suggested that the company would not sacrifice investment in its cash cow advertising for other bets like autonomous cars and delivery drones.
"One of the biggest investment opportunities continues to be in our advertising business," Porat told analysts. "I do not want to leave you thinking that the investment just goes to new businesses.
Google's advertising activity grew by 24%, pushing the total Alphabet business figure, minus partner payments, to 26.24 billion US dollars (RM106.73bil) in the second quarter. . Analysts were banking on US $ 25.55 billion (RM103.92bil), according to data compiled by Bloomberg. These gains came even when Amazon.com Inc. is accelerating its own announcements business.
Pichai pointed to the increasing use of digital business cards, especially in emerging markets. He added that Google was exploring other ways to insert slots and ads into its Google Maps service, which has had limited commercial applications to date.
A larger share of Google's advertising money has gone to its own digital properties, including the search engine and YouTube, rather than external websites that run its ads. Google's business turnover jumped 26% to 23.3 billion US dollars (94.77 billion yuan). This jump reflects a recent push by Google to ensure that marketers buy more on its advertising channels. "They use the packaged offer, with all their properties, with a much stronger sell," said Marco Rimini, development director of Mindshare's WPP Plc agency.
As second-quarter sales jumped, costs for the tech giant also increased. Google's capital expenditures climbed to US $ 5.3 billion (RM21.55bil), up 87 percent from the same period in 2017. Porat highlighted sales and marketing spending for Google's cloud division , which is organizing its conference this week.
Money paid by Google to websites and mobile partners to distribute its search engine and advertisements, called Traffic Acquisition Costs, also reached $ 6.4 billion (RM 26.02 billion) for the trimester. However, this represented 23% of the advertising business, compared to 24% in the first quarter of 2018.
"The TAC is below expectations, which is clearly positive from the quarter," Dan Ives, responsible technology research GBH Insights, writes in a note to investors.
Investors are also looking for signs of growth beyond advertising, such as Google's cloud computing business. The other business turnover of the company, which includes hardware sales, cloud and applications, grew by 37% to 4.4 billion (17.89 billion yuan) ) in the second quarter.
Pichai mentioned new cloud customers, including Domino's Pizza Inc., SoundCloud Ltd and PricewaterhouseCoopers LLP, during the call with analysts.
Other Bets, home of Google's riskiest venture companies, lost US $ 732mil (RM2.97bil) in the quarter, compared with a loss of US $ 633mil (RM2.57bil) over the same period a year ago earlier. – Bloomberg
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