The four largest American companies specialized in the technology industry succeeded in violating the downward global economic trend due to the consequences of the Corona pandemic, despite being shocked by the slowdown in spending at the beginning of the crisis, as it announced consolidated profits of $ 28.5 billion during the second quarter of 2020.
The New York Times said that one day after lawmakers in Congress questioned the chief executives of the largest technology companies about their size, power, and monopoly, Amazon, Apple, Alphabet and Facebook reported good quarterly financial results Surprisingly, defying one of the worst recorded recessions. Although these companies felt affected by the slowdown in spending, they proved that they operate in a different playing field from the rest of the economy.
Amazon’s sales increased 40% from last year and its profits multiplied. Facebook profits jumped 98%. As for Apple, despite the fact that the epidemic has closed many of its stores, the company increased sales of all its products in every part of the world and achieved profits of $ 11.25 billion. Advertising revenue fell for the failed Alphabet, but was still better than Wall Street had expected.
“The strong is still getting stronger,” said Dan Eves, general manager of equity research at Widbusch Securities. And as many companies retreat, technology experts continue to gain strength in this environment.
The financial performance of technology companies was in marked contrast to the general state of the American economy. The Ministry of Commerce said that the country’s gross domestic product decreased by 9.5% in the second quarter of the year as consumers cut spending. It was the biggest drop ever.
The Congressional Antitrust Committee questioned corporate leaders, Jeff Bezos from Amazon, Tim Cook from Apple, Mark Zuckerberg from Facebook and Sundar Pichai from Alphabet about market power and business practices, and that was part of a broader investigation by Regulators and legislators on the dominance of technology giants, with open investigations by the Ministry of Justice, the Federal Trade Commission, and state prosecutors.
The scene of the chief executives of the four companies, which amounted to approximately $ 5 trillion in market value combined, which appeared before a subcommittee of the House of Representatives, was historically. But antitrust investigations often take years, especially if regulators seek more stringent measures such as corporate dismantling.
The epidemic reinforced the advantages of major technology companies. And as consumers remain at home, demand for the Amazon shopping site has increased, while companies are turning to cloud computing products to maintain and operate their services. Apple said that switching to work and learning from home has pushed more people to order Apple devices and use their services.
“Our products and services are closely related to the lives of our customers, and in some cases, they are more through the epidemic than ever before,” said Luca Maestri, Apple’s chief financial officer. He indicated that Apple could have made several billion dollars without the epidemic.
Facebook and Google are still important to marketers and they are better off defeating ads than competitors. Facebook ignored sluggish spending and praised record levels of its product sharing.
“Alphabet” said that revenue from Google search ads decreased by 10%, which pushed the company’s total revenue for the first time in the company’s history, but that was better than competitors. And last week, Microsoft reported a 18% decrease in search ad revenue. Since the beginning of March, the share price of companies has increased by an average of 35%.
Backed by the boom in the online shopping epidemic, Amazon achieved $ 88.9 billion in quarterly sales, up 40% from the previous year.
Profit doubled to $ 5.2 billion, although the company invested in expanding warehouses and other ways to increase capacity. “Simply inject Covid-19 Amazon into a highly effective growth hormone,” said Tom Forte, an analyst at investment bank Davidson & Co. in a recent note to investors.
In April, Bezos told investors not to expect any operating profit, and possibly even a loss, as the company planned to spend about $ 4 billion on SK-related expenditures such as temporary wage increases, low warehouse efficiency due to social spacing, and $ 300 million to test its workforce with the virus .
But even those costs were not compared to the huge increase in demand, as online retail sales rose 48%.
In a call to reporters, Amazon refused to say whether to give warehouse workers bonuses or increases related to the virus this quarter, but added that the costs related to the epidemic would drop to two billion dollars in the quarter. Sales in Amazon’s lucrative cloud computing business, whose customers include big business and small startups, grew 29% to $ 10.8 billion, and were more profitable than analysts had expected.
“Facebook” revenue for the second quarter increased by 11% from the previous year to $ 18.7 billion, while profits jumped 98% to $ 5.2 billion. The results were much higher than analysts estimated revenue of $ 17.3 billion, with profits of $ 3.9 billion, according to the data.
Despite increased scrutiny by regulators, questions about their role in sabotaging the elections and how people use the platform to spread misinformation, no users or advertisers have shown a tendency to stop using Facebook. More than three billion people regularly come to the site or to one of its applications, as services exceed most of the developed world.
About 2.47 billion people use one or more Facebook applications every day.
The company said that the number of active users per month increased by 12% compared to last year and added that it witnessed record levels of interaction and use this year due to requests for accommodation in all parts of the world.
As for Apple, despite the global economic slowdown, people continued to collectively purchase their devices and paid the tech giant billions of dollars for applications and services on these tools.
And Apple said that its sales increased 11% to 59.7 billion dollars, and its profits increased 12% to 11.25 billion dollars. Both numbers easily beat analysts’ expectations, as Wall Street expected declines in both areas.
Sales were particularly strong for Mac and iPad devices, as audiences increasingly had to work online and socialize virtually. Revenues in Internet services have also increased, including the reduction in Apple sales from the Apple Store, the subject of antitrust investigations in the United States and Europe.
Even the iPhone, which remains the company’s largest product, has seen a slight increase in sales for the second time only in the past seven quarters. Apple also announced the division of shares, which would quadruple the number of its shares, allowing people to buy a share in the company at a quarter of the current share price, which closed at 384.76 dollars last Thursday.
Alphabet reported its first ever drop in quarterly revenue, due to slowing spending by advertisers. The company recorded revenue of $ 38.3 billion and profit of $ 6.96 billion, much higher than what Wall Street analysts expected.
Ruth Porat, the company’s chief financial officer, said that advertising revenue had gradually improved over the quarter. This decrease came in large part from the decrease in advertising sales that run alongside the results of Google Search revenue, but the company’s efforts to diversify its business were paying off with the growth in revenue from YouTube ads and the growth of the cloud computing business.
As part of its continued investment expansion, Amazon announced that it intends to invest ten billion dollars in its project to provide satellite Internet.
The American group revealed that it intends to proceed with the “Kuiper” project, one of the systems designed to provide Internet to customers without any terrestrial connections. The project aims to provide high-speed internet access via satellite in the United States, and later in various parts of the world, and the project can connect to the Internet wireless equipment and 5G networks.
Amazon did not specify any timetable for the project, but revealed that it would start publishing 3,236 satellites after the FCC approval of the project.
Amazon Vice President Dave Limb said: We have recently heard many accounts of people who are unable to do their job or do homework because of the lack of reliable internet in their home.
He added: In many places, access to the Internet is still not reliably secure or not available at all. Kuiper will change all that. Our $ 10 billion investment will create jobs and infrastructure in the United States, which will help us bridge this gap.
The “Kuiper” project aims to provide high-speed internet service to places where fiber optic or wireless networks cannot reach.
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