US technology giants present mixed earnings | Business| Economy and finance news from a German perspective | DW | 24.04.2015
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US technology giants present mixed earnings

While Amazon's growing Cloud sales brightened its massive net loss, successful changes in Microsoft's business are easing investor concerns about a further drop in income. By contrast, Google still shines on all fronts.

Internet search giant Google remains a money-making machine even as average ad prices are falling and the company is under pressure from EU antitrust authorities for some of its practices.

Google's first-quarter earnings rose 4 percent from the same period last year to $3.6 billion (3.31 billion euros) as the company's advertising business lifted revenue by 14 percent to $17.3 billion.

The company's chief cinancial officer, Patrick Pichette, said in a press release that without the strong dollar's "headwinds" against foreign earnings, revenue would have risen 17 per cent.

Despite stiff competition from rivals Facebook and Yahoo, income from online advertising was up 11 percent. Pichette said the company's mobile advertising business was moving with "great momentum."

Nevertheless, the transition from desktop computers to smartphones has caused a decline in the average price of the ads displayed on Google. They dropped by 7 percent on average during the first three months of the year - the 14th consecutive quarter the cost-per-click measure has fallen.

Investors were, however, encouraged by a healthy gain in the number of people looking at Google's ads, climbing 13 percent from last year. The stock surged $20.85, or nearly 4 percent, to $578.31 in extended trading after the results came out Thursday.

Cloud with a silver lining

Business at online retailer Amazon, however, remained partly clouded between January and March, as the company reported a loss of $57 million.

Nevertheless, Amazon's shares rose $24.01 to $414 following the earnings report as investors welcomed a surge in the company's Cloud computing services that helped drive a 15 percent rise in total sales.

Net sales for Amazon Web Services climbed 49 percent to $1.56 billion, with profit in the segment rising from $245 million to $ 265 million.

Chief Executive Jeff Bezos said in a press release that cloud computing was a "5-billion-dollar business" for Amazon, with sales "accelerating."

In the quarter, the company also continued new offerings. Amazon introduced Amazon Echo, a Bluetooth speaker that responds to voice commands. Also new is Amazon Dash - stand-alone buttons that can be pressed to reorder common household goods.

In addition, it rolled out services that help users book travel and hire people to complete household projects. And it expanded Amazon Prime Instant Video, developing new content for its members, including a TV series with Woody Allen.

Microsoft beats street despite loss

Microsoft income for its third fiscal quarter fell to 4.99 billion dollars, down 12 per cent year-on-year. But the technology giant also surprised analysts with strong growth in its Cloud computing sector.

Overall revenues increased 6 percent to $21.73 billion, driven by 106-percent rise in Cloud service sales, which include subscriber software services Office 365, Azure and Dynamics CRM Online.

"Around the world, we're seeing high interest in deployment of our Cloud and server products," Chief Operating Officer Kevin Turner said.

Microsoft Chief Executive Satya Nadella has been investing in new services and redesigning Microsoft's most popular programs for smartphones and other mobile gadgets.

Noting that the quarterly report was a "big step in the right direction," FBR Capital Markets analyst, Daniel Ives, told the news agency AP that Nadella now needed to "not just talk the talk, but walk the walk."

Microsoft was still heavily dependent on selling traditional software, he criticized, with the segment contributing the largest part of its sales for the quarter. But while overall revenue increased, the company saw a 26-percent drop in Windows licensing revenue for consumer PCs and a 19-percent drop in licensing for business PCs.

uhe/ng (dpa, AP, AFP, Reuters)

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