Alphabet Results Ease Advertising Slowdown Worries

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Advertising sales drive profit and sales growth at Google parent, beating Wall Street expectations

Google parent Alphabet has pleased the markets with its second quarter results, boosted by a strong showing from the advertising business, prompting an 8 percent share price rise.

It has been a busy year for the company, which has had to contend with staff unrest over a number of issues, as well as hefty fines, mostly imposed by European competition regulators.

Investors have also been worried about an industry-wide slow down in advertising spend in the US and Europe, and they have also been concerned at the spending levels at Google, despite surging profits and revenues.

Advertising strength

So how exactly did the second quarter financial results pan out in the end?

Well for the three months ending 30 June, Alphabet posted a net profit of $9.9bn, up from the profit of $3.2bn a year ago.

There was also good news on the revenue, as overall sales rose to $38.9bn from $32.6bn in the same year-ago quarter.

It is reported that 85 percent of Alphabet’s revenues come from advertising sales.

“Our effort to build a more helpful Google for everyone brings countless opportunities to help users, partners, and enterprise customers every day,” said Sundar Pichai, CEO of Google.

“From improvements in core information products such as Search, Maps, and the Google Assistant, to new breakthroughs in AI and our growing Cloud and Hardware offerings, I’m incredibly excited by the momentum across Google’s businesses and the innovation that is fueling our growth,” he added.

Banana skins

Despite positive results, there are some potential banana skins for Alphabet going forward, centering around privacy worries and regulatory investigations.

Earlier this week the US Department of Justice confirmed an investigation into “alleged anti-competitive practices” by ‘market leading online platforms’.

The antitrust investigation did not name any particular companies, but it is widely assumed it will include the likes of Facebook, Google, Amazon and maybe even Apple.

It comes just days after it was revealed that Facebook has to pay up to a $5bn settlement with the Federal Trade Commission (FTC) over the Cambridge Analytica data sharing scandal.

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Author: Tom Jowitt
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