Alphabet disappointed investors with a fourth quarter report The companys advertising
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Alphabet disappointed investors with a fourth-quarter report: The company’s advertising business falls after starting in a pandemic

Alphabet released its earnings and earnings report for the fourth quarter on Thursday. The numbers came in significantly lower than what equity experts were expecting — compared to spending during the pandemic, advertisers have significantly reduced spending on advertising for their businesses.

    Image source: Sven Brandsma/unsplash.com

Image source: Sven Brandsma/unsplash.com

In a report to investors, Alphabet struck a very dovish tone, promising a new phase of “belt-buckling,” specifically cutting costs, spending on real estate and experimental projects that can only bear fruit after years of development. After the close, shares of the company fell 5%. At the same time, they are known to have lost about 40% of their value in 2022.

According to the head of the company Sundar Pichai (Sundar Pichai), Alphabet responsibly approaches investments, choosing areas where it can work in the most financially efficient way. It is noteworthy that recently his competitor, the head of Meta* Mark Zuckerberg. Reasons for some decline in many IT companies are the end of the period of “abundance” that prevailed during the pandemic, when people spent a lot of time at home on the Internet during the sanitary restrictions. In 2023, Alphabet’s CFO Ruth Porat promises to align the company for revenue growth and significant changes in its cost structure.

Advertisers are known to continue to lower the cost of Alphabet services, as they believe rising inflation and high lending rates could impact potential buyers’ spending on their goods and services. Not the least role was played by the decline in the exchange rates of many currencies against the dollar, which also had to affect the indicators.

    Image source: CNBC

Image source: CNBC

According to Pichai, implementing AI systems will become a priority for the company, she plans to unveil the LaMDA chatbot to the public in the coming weeks.

Meanwhile, the company decided to cut 12,000 jobs — about 6% of all employees — last month and intends to slow its hiring pace this year and focus more on AI, likely amid ChatGPT’s viral success.

Net income for the period fell to $13.62 billion, or $1.05 per share, compared to $20.64 billion, or $1.52 per share, a year earlier. This is Alphabet’s worst performance in four quarters. Adjusted earnings of $1.05 per share were lower than the $1.18 expected, according to Renfinitiv estimates.

Google’s advertising revenue, including search and YouTube, fell 3.6% to $59.04 billion; total revenue rose 1% to $76.05 billion, the first slow growth in many years barring a slight decline in the second quarter of 2020. Industry experts are known to have been expecting $76.52 billion.

Google is the largest digital advertising platform in terms of market share, making it extremely vulnerable to market fluctuations. Additionally, YouTube’s business is under pressure from up-and-coming competitors like TikTok, which are attracting younger audiences.

    Image source: CNBC

Image source: CNBC

According to Porat, this year’s investments will be at the same level as last year. As more employees work remotely and the company streamlines its workforce, Alphabet expects to cut real estate costs, which should be about $500 million in the first three months of the year alone.

Ad revenue on YouTube, one of Alphabet’s biggest fundraisers, fell about 8% to $7.96 billion, well below the $8.25 billion expected

However, the company does not only have immediate financial concerns. Last month she was charged in the US with anti-competitive practices in the sale of digital ads. Numerous lawsuits have been filed against it, which could cause serious harm to the IT giant if settled by the courts.

* It is included in the list of public associations and religious organizations for which the court made a final decision, activities on the grounds of Federal Law No. 114-FZ of July 25, 2002 “On Combating Extremist Activity”.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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