Monday, 29 November 2021

EU fine on Google weighs on parent Alphabet profits

SAN FRANCISCO: Google parent Alphabet reported that profit in the first three months of this year sagged under the weight of a hefty antitrust fine in the European Union.

Alphabet said that profit in the first-quarter fell 29 percent to $6.7 billion on revenue that climbed 17 percent to $36.3 billion.

The earnings took a hit from a European Commission fine that amounted to $1.7 billion at the end of March, according to the quarterly update.

Google shares were down 6.1 percent to $1,208.50 in after-market trades that followed release of the earnings report.

Although profits excluding the one-time costs were better than expected, revenue growth was below forecasts for the technology colossus which is the dominant internet search company and operator of the ubiquitous Android mobile operating system.

Chief financial officer Ruth Porat said in the release the results showed “robust growth” led by mobile search, ad revenues from YouTube videos and cloud computing.

“We remain focused on, and excited by, the significant growth opportunities across our businesses,” she said.

Google’s lucrative advertising platform remained the largest revenue driver for Alphabet, delivering more than $30 billion of revenues, but costs rose sharply as well.

The California giant showed widening losses for its “other bets” including the Waymo self-driving car project, Verily life sciences and services for internet for remote parts of the world and drone delivery.

“Other bets” showed an operating loss of $858 million, up from $571 million a year ago while revenues rose modestly to $170 million.

Some of the projects are moving closer to fruition: Wing became the first drone delivery company to receive air carrier certification from the US Federal Aviation Administration. Waymo has begun a limited rollout of its robotaxis in Arizona in partnership with automakers.

It is seeing growth in cloud computing for businesses, a market where Google is competing against Amazon, Microsoft and others.

“Google Cloud Platform remains one of the fastest growing businesses in Alphabet with strong customer momentum reflected in particular in demand for our compute and data analytics products,” Porat said in a call with analysts.

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