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After reporting earnings and revenue that missed expectations, Google parent Alphabet Inc. said on Tuesday it would slow hiring and control expenses, signaling that it was girding for tough times ahead as the economy falters. Microsoft will also aim to limit expenses, particularly around hiring. Alphabet Chief Executive Officer Sundar Pichai said the company was “focused on moderating operating expense growth.” Chief Financial Officer Ruth Porat, meanwhile, said she expected headcount additions to fall by more than half in the fourth quarter compared with the previous period.
“As we plan for 2023, we’ll continue to make important trade-offs where needed,” Pichai said. “Throughout Google’s history, periods of dedicated focus have enabled us to emerge strongly.”
There were disappointing results across Alphabet’s sprawling portfolio. Search and other related businesses, the company’s financial engine, generated third-quarter sales of $39.54 billion, compared with analyst estimates of $40.87 billion. Philipp Schindler, Google’s chief business officer, said some advertisers have begun to trim spending.
YouTube, which also fell short of expectations in the second quarter, is locked in a fierce battle for advertising budgets and users’ attention with ByteDance Ltd.’s TikTok. YouTube released a short-form video platform called Shorts to counter the popularity of TikTok, but analysts say the company still has ground to make up.
Microsoft Corp. gave a lackluster forecast for sales growth in its Azure cloud-computing services business, a closely watched measure of corporate demand, sending the shares reeling in late trading. Earlier, Microsoft posted its weakest quarterly sales growth in five years, throttled by the surging U.S. dollar, slumping PC demand and faltering advertising revenue. As the global economy teeters on the brink of a recession, sales of Windows software to PC makers swooned 15% in the recent period, and Chief Financial Officer Amy Hood forecast continued challenges in PC and ad markets for the rest of the fiscal year.
The Redmond, Washington-based company will continue to invest in key strategic priorities, Hood and Chief Executive Satya Nadella said. Hood forecast headcount increases will be minimal during the current quarter. The company has already had two small rounds of job cuts, and has eliminated many open roles in a bid to slow hiring.
Sales in the first quarter, which ended Sept. 30, rose 11% to $50.1 billion. Net income was $17.6 billion, or $2.35 a share. On average, analysts had estimated fiscal first-quarter sales of $49.6 billion and profit of $2.29 a share, according to a Bloomberg survey. Demand remained strong for cloud services, with Office 365 sales to businesses performing slightly better than expected, and the majority of large customers that signed up for Microsoft 365 licenses opting for the higher-end version, Hood said.
“While we are not immune, of course, from macroeconomic impacts, we really feel good about the businesses we are investing in, the strong growth rate, the position in the market,” Hood said.
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(This story has not been checked by Kashmir Bulletin and is auto-generated from other sources)
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