san francisco After Google’s parent company Alphabet ended the past year with record numbers, growth slowed at the start of 2022. In the first three months, revenues rose by 23 percent to $68.01 billion, as the world’s largest search engine provider announced on Tuesday after the US stock market closed. In the same period of the previous year, however, growth was still 34 percent.
Earnings fell to $16.4 billion from $17.9 billion in the same quarter last year. Analysts had expected better key figures from the company from Mountain View, California, in both categories. The group’s shares fell by more than six percent in after-hours trading.
Alphabet on Tuesday cleared the way for the largest share buyback program in the company’s history. The company wants to buy back securities for $70 billion. In the previous year, the company had already bought back shares worth 50 billion.
Other technology companies such as Apple and Meta had launched share buyback programs. The program is “in the best interest of the investors as well as the company,” argued CEO Sundar Pichai. Critics, however, have accused the company of buying back shares as the most unimaginative way to use profits.
Top jobs of the day
Find the best jobs now and
be notified by email.
Google continues to operate a highly profitable business. Investors on the stock exchange were used to the fact that the search engine operator was usually able to meet the expectations of the analysts and often even exceed them. This is now changing for key figures. Facebook’s top management in particular is likely to follow developments at Google closely. Because the team around Mark Zuckerberg will present quarterly figures on Wednesday and could announce a weak start to the year.
Youtube falls short of expectations
The video platform YouTube is one of the losers in the balance sheet of Google mother Alphabet. The platform generated $6.87 billion in advertising revenue. However, analysts had assumed $7.51 billion. “We’re feeling a headwind,” admitted the group’s chief financial officer, Ruth Porat.
At the same time, Google’s advertising business in Europe cooled down. The group had largely withdrawn from Russia. In addition, the European Union had announced stricter rules for the advertising business. In the world region, which Google also counts in the Middle East and Africa, revenue increased by 19 percent year-on-year but fell by 12 percent compared to the previous quarter.
At 44 percent, the cloud business grew faster than any other area of the group. After Amazon and Microsoft, Google is the largest cloud provider in the world. However, unlike its rivals, Google is making a big loss with the division. Sales rose to $5.82 billion in the first quarter of this year. However, the loss amounted to $931 million.
Analyst Eric Sheridan of the major bank Goldman Sachs continued to recommend shares of Alphabet as a buy. Within the year, he saw the company’s stock at $3,400. On Tuesday, Google shares were still around $2,460. Despite weaknesses at YouTube, the Internet search business has developed well for the company, Sheridan wrote. Analyst Brent Thill from the Jefferies analysis house also rates the group positively overall and sets his price target at $3,600.
CEO Sundar Pichai emphasized that “other bets” outside of the core business had developed well for the group. For example, the subsidiary for self-driving cars, Waymo, has expanded its offer to the metropolitan area of San Francisco. Revenue for the division jumped from $198 to $440 million year-over-year. However, the area is not profitable. The operating loss remained almost stable at around 1.15 billion dollars.
More: Google wants to buy security company Mandiant