Issue link: https://maltatoday.uberflip.com/i/1466204
10 UKRAINE 28.4.2022 GOOGLE parent Alphabet on Tues- day reported its first quarterly revenue miss of the pandemic after the war in Ukraine hurt YouTube ad sales, leaving investors rattled as the global economy sputters. e world's largest provider of search and video made a fortune over the last two years as the pandemic forced more shops and people online. But outdoing those sales is proving difficult so far this year with the war, rising inflation and product shortages causing advertisers to dump marketing campaigns, accord- ing to analysts. Alphabet chief financial officer Ruth Porat said it was too early to predict when sales slowed by the war may pick up and warned that the strengthening U.S. dollar would hurt sales even more in the current quarter. Sales miss Alphabet said first-quarter sales rose to $68.01 billion (€62.27 billion), up 23 per cent from last year but below the average estimate of $68.1 billion among financial analysts tracked by Refinitiv, its first miss since the fourth quarter of 2019. Notably, YouTube advertising sales of $6.9 billion missed analysts' target of $7.5 billion, according to FactSet. Porat said the war in Ukraine that be- gan during the quarter had an "outsized impact" on YouTube revenue because the company stopped ad sales in Russia and brand advertisers, particularly in Europe, pulled back on spending after fighting broke out. Google overall derived 1 per cent of its sales in 2021 from Russia, Porat said. She also reported moderating growth in sales to direct-response advertisers on YouTube, and added that cuts to app store fees to address antitrust concerns had wiped out gains in subscription revenue. Google's "other" revenue, which in- cludes app, hardware and subscription sales, were $6.8 billion, below estimates of $7.3 billion. Quarterly profit was $16.44 billion, or $24.62 per share, missing expectations of $25.76 per share. Alphabet also said its board had au- thorised an additional $70 billion in stock repurchases. It has bought back over $81 billion in shares over the last two years. Ad slowdown Google is expected to grab 29 per cent , or the leading share, of the $602 billion global online ad market in 2022, at least the 12th straight year it has been on top, according to Insider Intelligence. Facebook parent Meta Platforms, the second-biggest online advertising plat- form with an expected 21.4 per cent share of the global market in 2022, re- ports earnings on Wednesday. Its shares fell 2.5 per cent on Tuesday after Alpha- bet's results. Increasing competition from com- panies such as Amazon. com and By- teDance's TikTok are chipping away at Google ad sales, too. Still, retailers con- tinue to pour money into ads and trav- el and entertainment advertisers are ramping up again. In addition, Google is better posi- tioned than rivals to withstand econom- ic shocks because its advertising tools tend to be among the last abandoned by advertisers as they are well known, easy to use and reach more users than alternatives. High on the list of risks faced by the company are numerous lawsuits and investigations into whether Google has engaged in anticompetitive conduct through its advertising and other busi- nesses. e latest scrutiny has been on its pending $5.4 billion acquisition of cy- bersecurity services provider Mandiant, which the US Department of Justice is reviewing closely. Google has said it still expects to close the deal this year. Google Cloud, the unit that would contain Mandiant, increased revenue in the first quarter by 44 per cent com- pared with a year ago to $5.82 billion. Alphabet misses on revenue as YouTube ad business slowed by Ukraine war AFTER dramatic Nasdaq blood-letting overnight, the reassuring statement from Microsoft Corporation (NAS- DAQ:MSFT) on continued demand for cloud computing services, "will be heard around the world" and calm Wall Street nerves, according to one im- pressed analyst. Revenue for the tech titan's third quarter was reported at US$49.4bn, up 21% on a year ago, with sales from the Intelligent Cloud arm jumping 26% to US$19.1bn. Driven by strong growth in its Azure cloud platform, chairman and chief ex- ecutive Satya Nadella and his time gave guidance for US$21.1-21.35bn of cloud revenue for the fourth quarter, above Wall Street expectations. After the Nasdaq composite index plunged almost 4% overnight, its steep- est one-day drop since 2020, taking losses for the month above 12% and for the year to date over 21%. "ere are some moments in the fi- nancial markets that are pivotal and his- torical when put in context," said analyst Dan Ives at broker Wedbush, citing JP- Morgan boss Jamie Dimon's conference calls and 'hand holding' in the financial crisis. "Last night was one of them when in a white knuckle market with the whole Street (regardless of what sector you cover, value/growth, where you live in the world) watching Microsoft's earn- ings with a close eye, Nadella & Co gave a robust cloud guidance 'for the ages' that will calm Street nerves this morn- ing." Not only was this bullish for the com- pany but also "the whole tech sector moving forward", Ives said, with Mi- crosoft reiterating its confident stance from a quarter ago. But the optimism is not universal. We are seeing the end of the univer- sal strength of Big Tech that has driven market gains - especially in the US - in recent years, according to a note from Wolfe Research, with the tech bubble "likely to burst when fundamentals start to meaningfully deteriorate as the over- all economy slows". Ives acknowledged that along with Microsoft, other enterprise, cloud and cybersecurity names are seeing massive growth that is not slowing despite the shaky macro situation. "Despite the fear in the air given the Fed tightening backdrop and valuations falling off a cliff in tech, underlying dig- ital transformation growth is accelerat- ing and not decelerating into the rest of 2022 as part of this 4th Industrial Revo- lution," he said. "Microsoft's cloud guidance was stronger than the Street and when factoring in F/X headwinds we would characterize this as a blowout guide in terms of how investors will digest these numbers this morning. "The Fed raising rates and inflation issues will slow down the economy, but we view cloud spending as defla- tionary and ultimately on an acceler- ated path with Redmond leading the way." Microsoft reassurance 'for the ages' calms Wall Street nerves Microsoft boss Satya Nadella