Earnings Roundup: Tech Giants Face Toughest Time in History

Most tech-world giants released their financial reports for their respective quarters of fiscal year 2015-2016. Let’s go through a roundup of what the financial reports say and where each of the companies is headed.

Alphabet (Google)

Alphabet showed great progress recently, beating analyst expectations in the recent past, the company was predicted to do very well. Despite the value of its cost-per-click revenue decreasing, the analysts have estimated the company would do well. The company lost 6 percent in shares after the financial report for its Q1 for fiscal year 2016.

Here is a summary of Google’s earnings report:

• Revenue was $20.26 billion, up from Q1 last year but lower than the analysts’ expectations of $20.38 billion.
• Per share earnings were also less, at $7.50 per share. Analysts estimated $7.96 per share this quarter.
• Cost-per-click value continued to drop, down 9 percent year over year. Theoretically, they will be replaced by Paid clicks for mobile. Paid Clicks gained 29 percent value compared to the same quarter last year.
• Alphabet’s “other bets” reported $166 million in revenue with $802 million in operating loss. It’s better than last year’s 80 million in revenue and $633 million in operating loss, but it is still pulling the overall value down.
• Alphabet’s operating profit stood at 26 percent, higher than any of its competitors.
• In-hand cash increased by $10 billion during the last year.

Apple

If people were worried about Apple during the last two quarters, they’ve got even more up their plate now. Apple took a $40 billion hit yesterday, soon after it released its Q2 2016 earnings. Apple shares dropped by 8 percent within hours. As to what happened, it was poor sales, lagging revenue and possibly a stall in the continuous growth. Apple needs something other than an iiPhone SE and incremental updates to existing products to power ahead. The company will have to pull off some really good numbers if it wants to regain the investors’ trust.

• Apple revenue dropped to $50.6 billion, down from $58 billion in Q2 2015. It’s lower than the predicted $52 billion as well.
• Per share earnings stood at $1.90, $0.10 less than what analysts had estimated.
• Guidance was between $41 and $43 billion, down from $49.6 billion in Q2 last year and below the analyst estimates of $47.4 billion.
• iPhone sales of 51.2 million, more than analyst estimates of 50.7 million but down from last year’s 61.2 million.
• iPad sales of 10.3 million units, more than analyst estimates of 9.4 million but down from last year’s 12.6 million.
• Mac sales of 4 million units, less than analyst estimates of 4.4 million and down from last year’s 4.6 million.
• Revenue from China dropped to $12.5 billion from $16.8 billion in Q2 2015.

Facebook

While the rest of the tech giants are facing a tough time, Facebook is crushing it. The social network saw a massive increase in revenue and tripled its profits in just a single year. Such optimistic results pushed investors to bet for Facebook as its stock value went up by 9 percent within hours of the earnings call. Facebook usage is growing at a rapid pace in India, Indonesia, Mexico and Brazil. The company will be investing in its video platform and Instagram for future growth. Within 10 years, it plans to lead the world in virtual reality and artificial intelligence related products. World’s biggest social network has also launched a new class of non-voting shares to increase investment but maintain control over the policies and plans.

• Facebook’s revenue rose from $3.5 billion in Q1 last year to $5.38 billion, beating analyst expectations of $5.30 billion. A 53 percent increase year-over-year.
• Per Share earnings on non-GAAP basis was reported as 77 cents, beating predictions of 62 cents by a big margin.
• Net income stood at $1.51 billion, tripling from $512 million last year.
• Facebook’s advertising revenue ballooned by 57 percent in Q1 2016. It hit the $5.2 billion mark.
• Mobile ad revenue saw a 76 percent increase to contribute 82 percent (or $4.26 billion) to the total revenue.

Intel

Intel’s Q1 2016 earnings report was a mixed bag. While the company’s revenue was way below estimates, its non-GAAP share earnings beat Wall Street estimates. Prior to the earnings report, Intel announced a restructuring programme to move from a PC company to one which powers the cloud and smart IoT devices. The restructuring is expected to save the company $750 million in 2016.

• Intel reported revenue of $13.8 billion missing estimates of $13.83 billion but better than last year’s $12.78 billion.
• Per Share earnings were $0.54 much higher than analyst estimates of $0.47 and last year’s $0.41.
• The company will be cutting 12,000 jobs, 11 percent of its workforce, to improve its profits.
• Intel predicts $13.5 billion in revenue in the next quarter, excluding restructuring cost of $1.2 billion.

Microsoft

Microsoft just released its third quarterly earnings for fiscal year 2016 (FY16). The company increased its data centre expenditures during the past quarter by 65 percent. However, the investment paid off and Microsoft made a lot of revenue out of it. The outlook for the company’s mobile division doesn’t look good joined by the slowing PC growth which is causing reduced Windows sales.

• Quarterly revenues fell from $21.73 billion to $20.53 billion, lower than analyst estimates of $22.09 billion. The revenue drop is about 6 percent year-over-year.
• Earnings per share were reported at $0.47 GAAP and $0.62 non-GAAP, lower than analyst estimates. Microsoft blames high income tax as the cause. It says normal taxes would have raised the earnings by $0.04 per share, beating analyst estimates.
• Intelligent Cloud products’ revenue was up 8 percent to $6.1 billion. Operating profit was down 14 percent due to heavy investments in new data centres. Azure revenue was up 120 percent as enterprise mobility customers doubled to 27k.
• Personal computing revenue was up 3 percent in constant currency to $9.5 billion. Operating profit increased 57 percent to $1.65 billion.
• Surface revenue was up 61 percent to $1.1 billion driven by the sales of Seruface Pro 4 ad Surface Book.
• Windows Phone sales dwindled to $662 million, down 46 percent.
• Xbox Live monthly users grew by 26 percent for 46 million in revenue.
• Search advertising increased 18 percent in constant currency.
• Productivity and Office sales saw a 6 percent increase in revenue to $6.5 billion. However, operating profit was down 7 percent to $3 billion.

Samsung

Samsung is finally moving back up in sales and profits. The sales of the Galaxy S7 helped propel the company’s profits.

• Samsung made 49.8 trillion won in revenue, up 5.65 percent year-over-year.
• Net profits were reported as 5.25 trillion won ($4.56 billion), up 13.6 percent. Operating profits stood at 6.68 trillion won, beating previous estimates of 5 trillion won by a huge margin.
• IT and mobile communications saw operating profits jump 42 percent year-over-year to 3.89 trillion won. The release of the Galaxy S7 a month earlier helped propel profits.
• The semiconductor business saw an operating profit of 2.63 trillion won, down 0.3 percent year-over-year.
• Display business witnessed an operating loss of 270 billion won, down 0.79 percent. Samsung spent 2.1 trillion won of capital expenditure on its display business to ramp up its production capacity for OLED displays.
• Consumer electronics division saw operating profits rise by 0.7 percent to 510 billion won.

Twitter

Twitter is still a growing platform. Despite being miles behind Facebook, it can still be called the second largest social network. The company reported its earnings for Q1, the earnings reports were better than most predictions, but expects its revenue to drop in the coming quarters. Its stock was down 11 percent after the news.

• Twitter added 5 million more users. Number of users reached 310 million, up from 305 million.
• The social network reported profits of $0.15 per share. Better than Wall Street’s prediction of $0.10 per share.
• Revenue was reported to be $595 million, less than analyst expectations of $608 million.
• Twitter lowered its forecast for the next quarter targeting $590 million to $610 million, down from $678 million.