Google set to cap blockbuster year with sales gains

The company’s dominance in online search, video and Internet ad sales made it one of the major beneficiaries of the growth in digital advertising last year. Last year, small and large businesses alike flooded the advertising market to win over customers who had spent the early parts of the pandemic in their homes.

On Tuesday, Alphabet is expected to report sales of $72.23 billion and profit of $19.91 billion for the October-to-December period, according to analysts surveyed by FactSet. The company posted $56.9 billion in sales and $15.23 billion in profit during the same period a year ago, when the pandemic hampered growth.

The projected 27% growth in quarterly sales is the lowest the company has recorded for a three-month period since the end of 2020 and marks a decline from the 41% growth reported in the July-to-September quarter. Moderate growth has divided investors, with some optimistic Google will pick up its momentum in the coming year as Covid-19 and travel return, while others fear TikTok will dent YouTube’s video dominance and grow. The cost will cut the margin.

The split is evident in the company’s stock performance this year. Shares fell more than 10% in January after climbing 65% last year.

Gary Black, the Future Fund Active ETF manager, shrugged off the sliding share price, saying he expects Alphabet to keep its momentum as advertising dollars shift to YouTube and search from traditional TV.

“If you’re Pepsi or Ford, you’re looking for ways to communicate with your target audience and people don’t watch TV anymore,” said Mr Black, who has $100 million in funds under management and Alphabet. Second largest holding.

The biggest threat to Google comes from regulators in the US and Europe who are suing and proposing legislation to curtail its dominance. In the US, the company faces separate antitrust lawsuits against its ad-tech, search, and app-store businesses, as well as state cases for claims it misrepresented customers’ location information. has collected. In the US, it is facing proposed legislation that would limit the ability of tech companies to prioritize their own businesses, as well as a new bill led by Sen. Mike Lee (R., Utah) that would allow it to promote their advertising. Will force you to sell the technology. Unit.

At best, the challenges, according to analysts, would attract legal fees to the company and discourage acquisitions that could attract the ire of regulators. In the worst case, the company may be forced to take down some business units in order to comply with judicial rulings or new laws.

UBS Securities LLC analyst Lloyd Walmsley said in a note to clients that the attack should prompt the company to add dividends for the first time, because “putting money in shareholders’ pockets could help goodwill as regulation heats up.” “

Much of Google’s growth over the past quarter has come from more e-commerce advertisers eager to reach customers whose product searches begin online. When the pandemic required that local businesses expand into e-commerce, Google partnered with Shopify Inc. to make search listings and ad purchases easier for millions of merchants. partnered with.

Total ad sales are expected to grow 27% to $58.67 billion in the December quarter. YouTube is estimated to be a major contributor with sales of $8.84 billion, totaling $29.06 billion for the year, nearly $500 million less than Netflix Inc., the streaming-media subscription service.

Google has been pressured by investors to diversify further from a digital advertising business, which still accounts for more than 80% of total sales. The company has invested heavily in building out a cloud-computing division that is based on established players Amazon.com Inc. and Microsoft Corp. which have a market share of 41% and 20% respectively.

To boost its 6% market share, Google hired CME Group Inc. in exchange for long-term cloud contracts. Took equity stake in companies like This strategy is expected to help Google report cloud sales up 45% over the period to $5.57 billion.