Daily Management Review

Q3 results: Internet giants keep growing


10/27/2017


This week, three technological giants - Alphabet, Amazon and Microsoft – revealed their reports for the third quarter. All of them showed a significant increase in revenue and profit. According to experts, the growth of technology companies will continue in the future. Nevertheless, the giants are facing new challenges as they are increasingly being criticized for their lack of transparency, abuse of market position and underpayment of taxes.



katrina.alana
katrina.alana
Almost immediately, three major technology companies - Alphabet (belongs to Google), Amazon and Microsoft - reported a sharp increase in profits in the third quarter. The net profit of Alphabet grew 33% to $ 6.73 billion, the company's revenue increased 24% to $ 27.7 billion. Amazon's revenue jumped by 34% to $ 43.7 billion, net profit was $ 256 million on 1,5% in comparison with the last year. Microsoft's net profit growth reached 16% (to $ 6.6 billion), revenue increased by 12%, to $ 24.5 billion. Two more technological giants - Apple and Facebook - are due to report next week.

Robert W. Baird & Co’s analyst Colin Sebastian says "The strong ones keep growing stronger. The main engines of their activities - the growth trends of electronic commerce and digital advertising - remain high powered". Alphabet’s income from advertising in the search results and on YouTube grew by a record 22.6%. At the same time, the income of technological corporations also comes from spheres that are not key for them. Thus, Alphabet’s non-advertizing profit grew by 40% in the third quarter. Recall that the company develops services related to cloud technologies. "Are you going to use the Internet less in the next year? These are already the largest companies in the world, and they will continue to expand, "said analyst of Macquarie Capital Ben Schachter.

At the same time, technology companies are increasingly confronted with problems, including their capacity and inclusiveness. Recently, Google, Facebook and Twitter found themselves at the center of a scandal over the placement of advertisements during the presidential election in the US, which allegedly was sponsored by the Russian authorities. After that, they were flooded by criticism and calls for greater transparency. Some are also dissatisfied with the companies’ dominant position. In June, the European Commission appointed Google a fine of € 2.4 billion for abuse of the dominant position in the market. The European authorities also want these corporations to pay more taxes to the EU. Apple, Amazon, Google were accused that they are not paying enough taxes, sounded against.

Besides, advertisers are posing increasingly more questions for technology corporations. Earlier this year, a scandal over the placement of advertisements of various companies alongside video materials of extremist groups erupted on YouTube. This week, Twitter acknowledged that it mistakenly overstated the number of users in the past three years.

source: bloomberg.com






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