Big Tech surges during Covid even as US economy slumps

AMAZON.COM, APPLE, GOOGLE AND FACEBOOK REPORTED STRONG QUARTERLY EARNINGS

SAN FRANCISCO: A day after US Big tech CEOS — Amazon.com Inc.’s Jeff Bezos, Alphabet Inc.-owned Google’s Sunder Pichai, Apple Inc.’s Tim Cook and Facebook Inc.’s Mark Zuckerberg — faced a bipartisan US Congress grilling in relation to an antitrust probe, the tech majors reported strong earnings as demand for their offerings surged owing to the rise in remote work due to Covid-19.

Apple Inc on Thursday delivered blowout quarterly results, with fiscal third-quarter revenue and profits of $59.69 billion and $2.58 per share, compared with analyst expectations of $52.25 billion and $2.04 per share.

Sales in its services segment, which also includes offerings such as icloud and Apple Music, rose 14.8% to $13.16 billion, compared with and analyst expectations of $13.18 billion. Apple did not give a fiscal fourth-quarter forecast.

Alphabet shares were barely changed at $1,552, above their pre-pandemic high, after it said revenue fell 2% in the second quarter, less than analysts’ estimate of a 4% decline.

Alphabet, whose ad sales account for about 78% of its revenue, has struggled during past economic slowdowns, as marketing is often the first budget item to get slashed.

Overall second-quarter revenue was $38.3 billion, with the slowest growth since a 2.9% increase during the Great Recession in 2009. Alphabet announced a $28 billion boost to its share buyback program. Alphabet’s profit was nearly $7 billion, or $10.13 per share, above analysts’ average estimate of $5.6 billion, or $8.29 per share, for the quarter.

About 66% of its revenue came from Google search and Youtube ads. Amazon.com Inc. posted the biggest profit in its 26-year history as online sales and its lucrative business supporting thirdparty merchants surged during the pandemic. Shares of Amazon, the world’s largest online retailer, rose 5% in after-hours trade. Online store sales jumped 48% to $45.9 billion in the second quarter. Revenue from Amazon Web Services rose nearly 29% to $10.81 billion.

Amazon forecast net sales of $87 billion to $93 billion for the third quarter, ahead of analysts’ expectations of $86.34 billion, according to IBES data.

Meanwhile, Facebook Inc. beat analysts’ estimates for quarterly revenue. Ad sales, which contribute nearly all of Facebook’s revenue, rose 10% to $18.3 billion in the second quarter. Net income came in at $5.2 billion, or $1.80 per share, in the three months ended June 30. Total costs and expenses increased 4% to $12.7 billion in the second quarter, compared with the $12.5 billion analysts had forecast. The company was still recruiting aggressively, adding 4,200 new hires in the quarter, its most on record

A year earlier, Facebook earned $2.6 billion, reflecting a $2 billion charge related to a privacy settlement with the Federal Trade Commission.