Alphabet's profit falls 8% due to the costs of cutting staff and offices

The profit of Alphabet, the Google group, was reduced in the first quarter of this year due to the expenses of its restructuring plan, which has led to the layoff of some 12,000 employees.

The income of the company directed by Sundar Pichai grew by 3%, to 69,787 million dollars (about 63,600 million euros), according to the results communicated to the United States Securities and Exchange Commission (SEC) this Tuesday.

The benefits fell 8% to 16,436 million dollars.

Results were weighed down by $2.6 billion in charges related to headcount and office space reductions, partially offset by a $988 million reduction in depreciation expense for the change in estimated useful life of servers and certain network equipment, as explained by the company.

Alphabet's revenue has grown even as Google's advertising bills contract for the second quarter in a row.

Ad revenue totaled $54.548 million between January and March, about $110 million less than in the same period last year.

The drop is down from 3.6% in the fourth quarter of last year, but it's only the third time Google has suffered a quarterly year-over-year advertising pullback.

The engine of growth becomes the cloud computing business, Cloud, which invoices 7,454 million dollars, 28% more.

In addition, it goes on to contribute 191 million positive operating results, compared to losses of 706 million in the first quarter of last year.

For the group as a whole, revenue growth would have been 6% had it not been for the three exchange rate impact derived from the depreciation of the currencies in which it invoices in foreign markets against the dollar.

share repurchase

The company has announced the implementation of a share repurchase plan of 70,000 million dollars, more than 5% of the current value of the company.

That has boosted Alphabet's share price in after-hours trading.

The alarms have sounded in the Google group to see the advances of rival companies in the field of artificial intelligence.

They have the potential to replace a good part of the Internet searches that the company now benefits from.

Alphabet has decided to join part of Google Research (the Brain team) and DeepMind to significantly accelerate its progress in this area.

For now, it has not presented figures for that new unit, Google DeepMind.

Sundar Pichai, CEO of Alphabet and Google, said in a statement: “We are pleased with the performance of our business in the first quarter, with strong Search performance and momentum in Cloud.

We have introduced major product updates anchored in deep computing and artificial intelligence.

Our lodestar is providing the most useful answers for our users, and we see tremendous opportunities ahead as we continue our long history of innovation.”

Pichai had compensation of $226 million in 2022, counting titles assigned as part of a three-year compensation plan.

Sundar Pichai's remuneration rose nearly 36 times from $6.3 million in 2021 in a year when Alphabet shares fell nearly 40% on the stock market.

Pichai went on to earn 808 times what the middle-salary employee in the group: $279,802.

Of Alphabet's 190,000 workforce, some 95,000 earn more than that.

In January 2023, Alphabet announced a headcount reduction of 12,000 employees.

That has meant posting $2 billion in employee severance and related charges in the first quarter, representing the bulk of the expected costs associated with those layoffs.

In addition, the company is taking steps to optimize the space of its offices around the world and that has implied expenses of 564 million dollars.

“We may incur additional expenses in the future as we continue to evaluate our real estate needs,” the company says.

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