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With Retailers Increasing Ad Sales, Record Sales Posted By Alphabet's Google

With Retailers Increasing Ad Sales, Record Sales Posted By Alphabet's Google
Google parent Alphabet Inc announced plans for hiring and facility construction after the company reported better than expected quarterly sales from its advertising and Cloud businesses which was partly driven by the pandemic.
The lockdowns imposed to prevent the spread of the Covid-19 pandemic throughout the world pushed retailers and other clients to advertise online which helped Google, the firm that draws the most revenues from its internet advertising than any other company in the world, to offset the plunge in advertisements from firms in the travel and entertainment businesses.
"Google's products and support have been a lifeline for millions of small medium businesses hit hard by the pandemic," Chief Executive Sundar Pichai told analysts on a conference call.
The performance of the fourth quarter was described by Google’s Chief Financial Officer Ruth Porat as a "great end to a challenging year."
The sales growth rate of 13 per cent for the company for the entire of 2020 was its slowest since 2009 when the company had reported just 8.5 per cent growth. Despite this, the cash hoard of the company increased by by $17 billion in 2020 to $137 billion helped by spending cuts.
The company would restart expanding its Google Cloud business and hire more people and construct more data centers as well as incorporate artificial intelligence into more of its services, because of the deployment of Covid-19 vaccines and an increase in spending for advertisements by companies, said Porat and other executives.
An operating loss of $1.24 billion in the fourth quarter and a $5.6 billion loss for 2020 was posted by Google Cloud, Alphabet said in a new disclosure. That loss was 21 per cent more than the loss in the previous year.
Questions about whether Google would be able to spin the cash generated from its advertising business into the newly profitable venture of cloud computing have been raised of the company for long. Reaching that goal may take some time, Pichai acknowledged.
There was a 43 per cent rise in Alphabet's fourth-quarter profit at $15.2 billion, or $22.30 per share driven by $3 billion in unrealized startup investment gains, compared to market estimates of $15.95 per share.
91 per cent of Alphabet's record $56.9 billion in quarterly sales was accounted for by Google's advertising business, including YouTube. That was 23 per cent higher than the same period a year ago.
For the full year of 2020, there was a 46 per cent year on year growth in the sale revenues from Google Cloud partly because of the pandemic with fourth quarter revenues at $3.83 billion, and annual revenues of $13.1 billion for the full year.
According to analysts tracked by Refinitiv, it was estimated that the annual revenue for the Cloud business of the company would be at $3.82 billion and its annual revenues to be $53.1 billion.
Following a new assessment that extended the useful life of its servers and networking gear by a year or more, Alphabet said it expects a $2.1 billion boost to operating results in 2021.

Christopher J. Mitchell

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