From CNET: Google parent Alphabet posted weaker than expected third-quarter earnings Tuesday as the search giant deals with an inflation-mired economy and slowing ad spending. But Chief Executive Sundar Pichai defended the company's priorities, arguing that investments in areas like YouTube Shorts eventually will pay off.
In the quarter ended Sept. 30, Alphabet reported net income of $13.9 billion, or $1.06 per share, on revenue of $69 billion. Analysts expected the company to post earnings of $1.25 per share and revenue of $70 billion, according to Yahoo Finance. Net profit fell 27% from a year earlier.
"Times like this are clarifying," Pichai said, acknowledging the difficult results and economic climate. Alphabet is working "to make sure we are set up for the decade of growth ahead," with investments in areas like artificial intelligence, visual search, the Google Cloud computing service and its TikTok rival, YouTube Shorts, which attract 1.5 billion viewers per month.
The weaker than expected results come as advertising, the company's main revenue source, sees a contraction in a tumultuous economy. Inflation rose 8.2% in the US in September, and other parts of the world are seeing prices rise by upward of 50%, eating into consumer appetite for spending. Although advertising revenue increased 2.5% year over year to $54.4 billion, it fell 3% between the second and third quarters. For comparison, a year ago, Google's ad revenue surged 69% when advertisers were battling to meet consumer demand in the midst of the pandemic.
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