Technology

Google and Microsoft hammered

Alphabet

Google parent company Alphabet’s share price drops 6% after missing earnings expectations.

Microsoft’s share price dropped 6% on weak forward guidance despite beating earnings expectations with earnings per share of $2.35.

Despite this, US markets continued their strong momentum before these earnings calls, as the S&P 500 closed 1.6% higher and the Nasdaq climbed 2.3%.

The Nikkei 225 followed the momentum and is up 0.9% in early morning trade, while the Hang Seng finally rebounded a bit and climbed 1.2%.

In other news, Famous Brands reports a huge jump in earnings. Headline earnings per share (HEPS) increased 121% to R2.15 for the half-year period.

Here is the biggest news of the day.

  • Google parent company Alphabet’s share price drops 6% after missing earnings expectations. Earnings per share (EPS) came in at $1.06 compared to analyst expectations of $1.25, while revenue of $69.1 billion also missed expectations of $70.6 billion. YouTube ad revenue showed a worrying 2% decline to $7.1 billion, in contrast to the 3% growth that was expected. Google Cloud showed promising growth in revenue to $6.9 billion but also increased its losses to nearly $700 million. Google enacted several cost-cutting measures and noted that it would cut the pace of hiring new workers in half.
  • Microsoft’s share price dropped 6% on weak guidance despite beating earnings expectations. Earnings per share came in at $2.35 compared to analyst estimates of $2.30, while revenue also showed a slight beat with $50.1 billion compared to estimates of $49.6 billion. Microsoft’s guidance for next quarter’s revenue is between $52.4 billion and $53.4 billion, which implies 2% growth, while analysts were looking for revenue of $56.1 billion. Net income fell by 14% to $17.6 billion.
  • Famous Brands reports a huge jump in earnings. Headline earnings per share (HEPS) increased 121% to R2.15 for the half-year period. Revenue grew by 19% to R3.6 billion while operating margins increased to 11%. The company declared an interim dividend of R1.30 per share.
  • Spotify’ share price drops 7% on earnings miss despite growing subscribers and revenue. The company reported a loss per share of 0.99 Euro compared to analyst estimates of 0.85 Euro. Revenue came in at $3 billion Euro, narrowly beating estimates. Spotify grew monthly active users by 20% to 456 million and paid subscribers by 13% to 195 million.
  • Visa beats earnings expectations and increases dividend by 20% to $0.45 per share. Payments volume grew 10% while processed transactions grew 12%, leading to revenue increasing to $7.8 billion, up from $6.6 billion. Visa achieved earnings per share of $1.93 compared to analyst estimates of $1.87.

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