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Weak PC market affects Microsoft, Google reports less profit

2022-07-26T23:43:13.195Z


The analysts had expected more: the Ukraine war, a strong US dollar and low demand for computers are making business difficult for Microsoft. Google also fell short of expectations.


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Microsoft office in New York City (icon image)

Photo: Swayne B. Hall / dpa

The software group Microsoft performed worse than expected in the most recent quarter, despite significantly higher sales.

Corona lockdowns in China, burdens from the Ukraine war and the recently weaker PC market made business more difficult, the group announced on Tuesday after the US stock market closed.

In the three months ended June, Microsoft earned $16.7 billion, two percent more than in the same period last year.

Revenue increased 12 percent to $51.9 billion.

Despite the significant growth in business, analysts had expected better numbers.

The stock initially reacted after the trading session with price losses.

The balance sheet also suffered significantly from the strong dollar, which hurts overseas earnings when translated into US currency.

According to the company, without this exchange rate effect, the increase in sales would have been 16 percent.

Microsoft does a significant part of its business outside of the US home market and had already dampened expectations for the quarterly figures in June.

The Google parent company Alphabet closed the past quarter with a drop in profits.

The surplus fell year-on-year from 18.5 to 16 billion dollars, as the Internet giant announced on Tuesday after the US stock market closed.

Sales increased meanwhile by 13 percent to 69.7 billion dollars (68.9 billion euros).

The company's most important division - Google's advertising business - grew 11.6 percent year-on-year to $56.3 billion.

With high inflation and a slowing economy, online advertising spending is on the horizon as companies pay more attention to costs.

Advertising on Google search makes a lot of money

This was noticeable for the video app Snapchat with the slowest growth rate to date.

One question is whether the two giants, Google and Facebook, will also feel the effects of the slowdown – or whether their size and efficiency will make them more attractive to advertisers, especially in the current situation.

The business with advertising in the context of Google's Internet search grew by 13.5 percent to around 40.7 billion dollars.

Revenues on the video platform YouTube increased by 4.8 percent to a good 7.3 billion dollars.

Although Google failed to meet analysts' expectations, the share gained a good two percent in after-hours trading at times.

jok/dpa

Source: spiegel

All business articles on 2022-07-26

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