Google misses Street expectations; takes 4% slide

DURHAM – Alphabet, Google’s parent company, reported quarterly and annual earnings on Thursday evening after the close of the market.

And the company missed analysts expectations on earnings per share and on revenues resulting in a slide of about 4% in the tech giant’s share price.

The company, which is in the early phases of expanding its presence in the Triangle with a Durham office announced in 2021, reported an earnings per share of $1.05 compared to what consensus expectations projected at $1.18.

And the company’s revenue was short of expectations, as well. While the expectations for revenue was $76.53 billion, according to Refinitiv, Alphabet reported $76.05 billion.

But $7.315 billion in revenue came from Google Cloud, according to the company’s earnings report. That compares to $5.541 billion in the fourth quarter of 2021. The Durham Google office is focused on Google Cloud.

So while Google’s core business – advertising – declined by 3.5% year-over-year, Google Cloud grew by 32%. That’s a big buffer to the company, especially as Microsoft has invested billions of dollars in expanding a partnership with the company behind ChatGPT, which some have said could cripple Google’s core search business in the very near future.

“Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond,” said Sundar Pichai, CEO of Alphabet and Google in the statement. “There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices. We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet.”

But the quarterly earnings reported by the company were well below analyst’s expectations, declining by about a third from the prior year. The company’s stock price slid about 3.6% in after-hours trading on Thursday, following the earnings report and an investor’s call led by Pichai.

The company reported earnings for the third quarter in October, which showed a drop in advertising sales.

Google to lay off 12,000 workers; CEO cites ‘economic reality’

But company layoffs will have an impact on company’s bottom line

Google recently announced it would reduce its workforce levels by about 12,000 roles.

A statement released by the company noted that doing so will cost the firm as much as $2.3 billion, which will hit the company’s coffers in the first quarter of 2023.

Beyond the layoffs, Alphabet said in a statement that the company will be “taking actions to optimize our global office space.”

What that means remains unclear. But the company estimates that it will save approximately $500 million in the first quarter of 2023 by making those planned maneuvers.

“We may incur additional charges in the future as we further evaluate our real estate needs,” the company statement notes.