Alphabet Inc's Profit Down Due To Advertising Opinions On Google Anjlok Is Quite Bad

Google's ad revenue has plummeted. (photo: dock. google)

JAKARTA - Alphabet Inc, Google's parent company, on Thursday 2 February posted fourth-quarter earnings and sales under Wall Street expectations as Google's advertising client withdrew spending from an excess period caused by the pandemic.

Executives of search and advertising giants tried to calm down while calling investors, pledging an extended tightening period, particularly in real estate recruitment, costs, and experimental projects that could take years to achieve results.

Alphabet shares fell nearly 5% in after-hours trading, after losing about 40% of their value in 2022.

"We are committed to investing responsibly with high discipline and determining areas where we can operate more cost-effectively," Chief Executive Sundar Pichai told analysts when contacted to discuss the outcomes of the company. That supports comments from Meta Platforms Inc boss Mark Zuckerberg the previous day about cost efficiency.

Shares of other tech companies Apple Inc and Amazon.com Inc also fell after they posted disappointing results last Thursday, which removed profits after Facebook's parent Meta on Wednesday, February 1 raised tech stocks with news of huge cost cuts and buybacks.

It was a loss of some excitement during the pandemic when consumers flocked to the internet amid the lockdown and growing interest in e-commerce and touchless delivery.

Alphabet's chief financial officer, Ruth Porat, promised a more measurable approach for 2023 and focused on providing sustainable financial value, not necessarily the hallmark of Silicon Valley's company. "We focus on increasing revenue and long-lasting changes to the cost base," Porat said, quoted by Reuters.

Advertisers, which accounted for most of Alphabet's sales, have cut their budget as rising inflation and interest rates spark concerns over consumer spending.

Pichai pointed to the simpler spending of advertisers and the impact of foreign currency exchange rates abroad as an obstacle to Alphabet's overall proceeds.

He said artificial intelligence (AI) software will be an important focus for the company and plans to make LaMDA chatbot software publicly available in the coming weeks.

Mountain View-based Alphabet California decided to cut 12,000 jobs last month, representing about 6% of its overall workforce, and said it would double AI.

Alphabet, yang lama menjadi pemimpin dalam AI, menghadapi persaingan dari Microsoft Corp, yang dilaporkan ingin meningkatkan sahamnya di ChatGPT, chatbot menjanjikan yang menjawab pertanyaan dengan tanggapan seperti manusia.

"While viewed as one of the most isolated companies in advertising spaces relative to its peers, the poor quarter of Alphabet is the latest sign that deteriorating fundamentals and a difficult macroeconomic environment encourage advertisers to reduce spending," said Jesse Cohen, senior analyst at Investing.com.

Net profit fell to 13.62 billion US dollars (IDR 205.8 trillion), or 1.05 US dollars per share, from 20.64 billion US dollars, or 1.53 US dollars per share, obtained a year earlier. That was the sharpest drop for Alphabet in the last four quarters.

According to Refinitiv, Alphabet's adjusted profit of USD 1.05 per share fell from what was expected at USD 1.18 per share.

Revenue from Google's ads, which include Search and YouTube, fell 3.6% to $59.04 billion. Total revenue rose 1% to 76.05 billion US dollars, the slowest growth ever except for a small drop in the second quarter of 2020. Analysts estimated 76.53 billion US dollars.

Google is the world's largest digital advertising platform by market share, making it very vulnerable to online marketing spending fluctuations. Its YouTube division has faced a surge in rival platforms, especially TikTok, whose endless short video rolls attract younger users.

Porat from Alphabet said the company's total capital expenditure this year would be in line with last year. As more employees work remotely and consolidate staff, Alphabet hopes to reduce its real estate costs, which Porat says will cost about half a billion dollars in the first three months of this year.

The revenue from YouTube's ad, one of Alphabet's most consistent moneymakers, fell nearly 8% to 7.96 billion US dollars, well below the estimated 8.25 billion US dollars, according to FactSet.

Cloud is a bright spot, with revenue growing 32% to 7.32 billion US dollars, but at the slowest since the company began to reveal the segment's revenue figures.

But there may be more pain ahead for Alphabet. Late last month, the Department of Justice and eight states sued Google for what they said was an anti-competition practice in its digital advertising sales. The company faces many lawsuits, which if successful, could cause it to disband.