The tech stalwarts continue to build muscle and control in this setting when other businesses are dropping by the wayside.
The financial success of the tech firms was a startling contrast to the overall health of the U.S. economy. Combined, the companies posted a quarterly net profit of $28.6 billion, stressing how regulatory scrutiny remains more background noise and annoyance for them than an immediate threat to their company.
A congressional antitrust panel on Wednesday asked the representatives of the firms — Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Alphabet’s Sundar Pichai, about their market position and business practices. The pandemic has enhanced the advantages of the major tech firms.
While shoppers remain home, there has been an increase in demand for Amazon’s shopping platform, while businesses turn to its cloud storage tools to keep their services going. Apple said the move from home to work and learning had led more consumers to splurge on Apple’s gadgets and use its services. Facebook and Google remain important to advertisers, and they better weather the downturn in ads than rivals. Facebook has shrugged from a slowdown in sales, hailing high rates of engagement with its items.
Alphabet said, Google search advertising revenue dropped 10 percent by driving the company’s overall revenue down for the first time in the company’s history but it was still better than rivals. Microsoft posted a drop of 18 percent in revenue from search ads last week.
The stock prices of the firms have risen by an average of 35 percent since the beginning of March, compared to a 10 percent increase in the S&P 500.
Buoyed by a pandemic-induced surge in online shopping, Amazon reported quarterly revenue of $88.9 billion, up 40 percent from the previous year. And though the company invested in increasing factories and other ways to maximize capacity, income increased to $5.2 billion.
In April, Bezos told investors to expect little operating income, and maybe even a loss, as the company expected to spend around $4 billion on coronavirus-related expenditures such as temporary wage rises, warehouse productivity decreases due to social distancing, and $300 million to check its employees for the virus.
Yet even these costs did not compete with the tremendous rise in demand, with online retail sales increasing by 48%.
For the second quarter, Facebook’s revenue rose 11 percent from $18.7 billion a year ago, while income soared 98 percent to $5.2 billion. The results were well above analysts’ expectations of sales of $17.3 billion with a profit of $3.9 billion, according to FactSet data.
Given increased scrutiny by regulators, concerns about their position in subverting elections, and how people use the site to spread disinformation have shown little inclination to stop using Facebook.
Given the global economic downturn, consumers continued to purchase Apple devices en masse and paid billions of dollars more for software and services on those phones to the tech giant.
Apple said its revenue rose 11 percent to $59.7 billion and its income rose to $11.25 billion by 12 percent. Both estimates handily exceed forecasts from analysts, with Wall Street expecting declines in both regions.
Sales for iPads and Mac computers were especially powerful, as the public was increasingly forced to work and digitally socialize. Revenue also surged in its internet services business, despite slashing Apple ‘s profits from the App Store, which is the target of antitrust lawsuits in the US and Europe.
For just the second time in the last seven years, only the iPhone, which remains the company’s best-seller, saw a small boost in revenue.
Google’s parent company, Alphabet, announced its first-ever quarterly sales drop hit by a downturn in advertisers’ spending. The company reported $38.3 billion in sales and a $6.96 billion profit significantly more than what Wall Street analysts had expected.