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European fine and business slowdown sink Google



It is rare to Alphabet But that is what it did with the results of the first quarter of 2019. Not only did Google's parent-company report a lower-than-expected turnover by analysts, but it also saw a sharp drop in profits due to the fine imposed by the European Commission for abuse of a dominant position. After the presentation of results and the conference with analysts, Alphabet shares fell by more than 7%. This means that each bond fell by $ 92 against the closing price of $ 1,287 per share.

The CEO of Google, Sundar Pichai, focused on the positive aspects of the quarter and promised plenty of news for May as the company prepares for the annual I / O next week and for the Google Marketing Live conference later this month. "We feel very good about the huge opportunities ahead of us involving search engine and assistant, cloud computing, artificial intelligence and others," Pichai told the conference with analysts.

But the CEO's statements could not hide the volatility that the company's business is going through, something that was explicitly addressed by the chief financial officer Ruth Porat. The executive spoke of the negative impact of exchange rates in 2019, which cut $ 1.2 billion to the total cake of revenues, the € 1.5 billion fine imposed by the EC and the slowing of the growth of clicks paid on the websites from Google.

Here is one of the problems of this quarterly presentation. Paid clicks increased by 39% in the quarter, a decrease of 9% compared to the previous quarter and a slowdown compared to the previous year, when growth was 51%.

The same happened with the total turnover of 36.3 billion dollars, a rise of 17%, which compares modestly with the 26% growth in the same period. Rarely does Alphabet grow below 20% – never happened in 2018, for example. It's all about expectations and perspectives, denouncing a more challenging competitive environment in the area that generates more than 80 percent of Alphabet's revenue, advertising, and the necessary adjustment in the transition from desktop to mobile searches.

Ruth Porat also said Pixel smartphone sales were lower in the quarter, dragging the hardware segment, and the "Other bets" unit lost $ 868 million, generating revenue of only $ 170 million.

In the same quarter last year, profits had been $ 9.4 billion; this time stood at 6.6 billion, after deducting the fine from the EC. However, without the effect of the fine the profits would be 8.3 billion, which reveals that the business core was even less profitable in the first three months of the year.



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