Alphabet's profits drop 34% as ads slow

Google's parent company reported its fourth straight quarterly profit decline, weeks after laying off 6% of its workforce to cut costs.< /p>

Alphabet, Google's parent company, has settled into a period of stalled growth as economic uncertainty ripples through Silicon Valley. The days of the pandemic boom are over, when the internet giant's profits and number of employees soared. slowdown in digital advertising. Net income fell 34% to $13.6 billion, below Wall Street expectations of $15.3 billion, according to data compiled by FactSet. in the last three months of 2022, down 1% from the previous year and in line with analyst estimates.

Google has seen years of growth meteoric rise as consumers spend more time and money online during the coronavirus pandemic, lifting the advertising market on which the company depends. These advantages began to fade last year, when rising interest rates and inflation caused advertisers to limit their spending.

" We are on an important path to revamp our cost structure in a sustainable way and create financially sustainable, dynamic and growing businesses across Alphabet,” Sundar Pichai, the company's chief executive, said in a statement. Pichai said the company is undertaking a variety of efforts to rein in spending, including improving the financial performance of its Pixel line of phones and other gadgets, trying to make its loss-making cloud division profitable and boosting business on its platform. video form. YouTube.

Alphabet shares fell 3% in after-hours trading.

One ​​of his most notable recent moves re reducing costs focused on its workforce. After hiring 30,000 employees in the first nine months of last year, Alphabet said last month it would cut 12,000 workers, or 6% of employees. The company said Thursday that it expects to incur between $1.9 billion and $2.3 billion in severance and related charges, most of which would be accrued in the current quarter.

Alphabet also plans to spend $500 million to eliminate unnecessary real estate this quarter, as part of the expense reduction effort. He said it would also allow for better management of vendor spend and deploy more artificial intelligence to automate certain tasks and increase productivity. October. Workers in the United States who have been affected by the company's layoffs will officially remain employed through March, and the departure process could take longer for workers based in other countries.

< p class="css-at9mc1 evys1bk0">The publicity withdrawal coincided with other undesirable developments for Alphabet. ChatGPT, an artificial intelligence chatbot built by OpenAI, debuted to much fanfare in November, hinting that it could disrupt Google's search engine dominance. Mr. Pichai declared a "code red" in response, reassigning teams to prioritize A.I. projects.

Mr. Pichai said that in the coming months, Google will allow users to access a version of its search engine that incorporates chatbot functionality, which has been reported by ear...