Big tech top sales estimates

Three of the biggest companies in the world all beat Wall Street estimates, as Microsoft Corp., Apple Inc. and Alphabet Inc. were buoyed by consumers buying again during an uneven pandemic reopening.

Mountain View, Calif.based Alphabet Inc., the parent of Google, reported strong quarterly sales driven by robust digital ad spending from marketers who are eager to get people back into stores.

Second-quarter revenue, excluding payments to distribution partners, was about US$51 billion, the company said Tuesday in a statement. Analysts projected US$46.1 billion, according to data compiled by Bloomberg. Profit was US$27.26 a share, topping the average estimate of US$19.35.

After a digital-ads slowdown a year ago during the COVID-19 pandemic, Google’s advertising business rebounded, buoyed by marketers spending more on search to convince consumers to travel and shop in stores again. The increase in digital advertising sales in the period ended June 30 followed similar results reported last week by social media companies Twitter Inc. and Snap Inc. Google is the world’s largest digital advertiser and is on target to finish the year with almost 29 per cent of the global market, according to analyst Emarketer.

The sales growth “reflect elevated consumer online activity and broadbased strength in advertiser spend,” Chief Financial Officer Ruth Porat said in the statement.

In a conference call after the results, Chief Business Officer Philipp Schindler said retail was “by far” the biggest contributor to the bump in advertising, with the travel, financial services, media and entertainment sectors also growing during the quarter.

Alphabet chief executive officer Sundar Pichai has targeted e-commerce as a major growth area for the internet giant. He deepened his company’s relationship with Shopify Inc., to sharpen its commerce efforts while it continues to chase Amazon. com Inc. Subsidiary Youtube has also joined in. The world’s largest video platform bought an Indian company, Simsim, earlier this month to push deeper into video commerce.

Google has become a chief target of antitrust regulators around the world, who have alleged the company has rigged swaths of the internet to kneecap rivals and aid its growth. The company is facing four lawsuits at home, one from the U.S. Department of Justice and the other three brought by coalitions of state attorneys general. The European Union also formally opened an antitrust probe into Google’s ad technology business last month.

Apple, meanwhile, saw record third-quarter revenue on demand for iphones, ipads and services, bolstered by retail stores reopening globally and consumers embracing new 5G networks.

Sales grew 36 per cent to US$81.4 billion from a year earlier, the tech giant said on Tuesday. Analysts were expecting revenue of US$73.8 billion. The iphone, Apple’s core product, generated US$39.6 billion, beating projections of US$34.6 billion. The third quarter is typically one of Apple’s slowest periods — with consumers holding out for new phone launches around September — but the 5G iphone 12 appears to have helped the company buck that trend.

The results suggest that Apple is gaining momentum as the company navigates its way through the pandemic and readies a fresh iphone lineup in coming months.

“Our record June quarter operating performance included new revenue records in each of our geographic segments,” Chief Financial Officer Luca Maestri said in a statement. Apple continues to make significant investments to support long-term growth, he said.

Apple reported US$7.37 billion in revenue for the ipad, topping expectations of US$7.13 billion. Apple debuted new ipad Pro models in April, but the line was constrained due to problems building new screens for the larger models. For the Mac, Apple reported revenue of US$8.24 billion, exceeding the US$8 billion estimate.

Microsoft Corp. reported sales and profit that exceeded analysts’ estimates for a 10th straight quarter, though investor optimism was tempered by concern about slowing growth in the software giant’s Azure cloud-computing business.

Sales in the fourth quarter, which ended June 30, climbed 21 per cent to US$46.2 billion, the Redmond, Wash.-based company said Tuesday in a statement. That compared with the US$44.3 billion average estimate of analysts polled by Bloomberg. Net income rose to US$16.5 billion, or US$2.17 a share, while analysts had predicted US$1.92.

Microsoft’s market value now tops US$2 trillion..