By Michael Liedtke, Technology Writer
BERKELEY, Calif. (AP) --Google reported its weakest revenue growth in nearly five years as the pandemic-driven recession began to shrivel its advertising sales in the first quarter.
The January-March earnings for Google parent Alphabet offer a first look at how the digital ad market has fared amid widespread orders requiring consumers to stay at home. Those restrictions have given most advertisers little incentive to market their products and services.
It's an incomplete picture because ad demand in most parts of the world wasn't hit hard until late February and early March. That's when the coronavirus outbreak accelerated and governments imposed lockdowns to fight it.
"Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues," said Ruth Porat, Alphabet's chief financial officer.
Alphabet's first-quarter revenue increased 13% from the same time last year to $41.2 billion. While most companies would celebrate that kind of growth, it's a significant slowdown for Google, which has regularly generated quarterly revenue gains of 20% to 25%.
The company's revenue growth hasn't been this low since the summer of 2015, before Google created Alphabet as a new holding company for itself and a hodgepodge of small, risky tech ventures.
The performance was still slightly better than revenue of $40.8 billion projected by analysts surveyed by FactSet Reearch.
Alphabet earned $6.8 billion during the quarter, a 2% increase from last year. The company's stock climbed nearly 4% to $1,278.96 in extended trading, although shares remain about 17% below their peak reached about two months ago
Facebook, the second largest seller of digital ads behind Google, is expected to also disclose a dramatic slowdown on Wednesday when it's scheduled to release its January-March numbers.
The current April-June quarter is expected deliver even grimmer news, with major advertisers in airlines, hotels and other travel-sensitive have little or no reason to spend anything to reach consumers either prevented or uninterested in going on their usual summer vacations.
Neither Alphabet nor Google have ever issued guidance on future results, and and it isn't deviating from that practice now. Stock-market analysts, however, aren't particularly optimistic.
Their second-quarter projections foresee flat Alphabet revenue. A no-growth quarter would be unprecedented for Google. Its most lackluster showing so far came more than a decade ago in the midst of the Great Recession when revenue during the second quarter of 2009 rose by a paltry 3%.
Even as its revenues slow, Google remains a moneymaking machine, thanks how deeply ingrained its search engine, digital maps, Gmail and YouTube video services are in people's lives. YouTube fared particularly well in the first quarter; its revenue increased 33% from the same time last year, driven by how much more time people are spending watching video while stuck at home.
Demand for all kinds of online service also helped bolster the company sales of services that help operate websites. Google's cloud-computing division posted a 52% revenue increase.
But advertising tied to search results remains the company's financial engine, and it is sputtering along with the rest of the economy. Revenue from Google's search engine rose 9% during the first quarter, and presumably has deteriorated further since the end of March.
To help cushion the financial blow, Alphabet CEO Sundar Pichai has already curtailed the company's hiring plans for the rest of the year and also is slashing the marketing budget to promote its own products and services.
The challenges facing Google are a downside of running a business built on offering free digital services paid for by ads. That model is more vulnerable to economic turbulence than to others based on paid subscriptions that people still value in tough times.
That has been particularly true for video streaming service Netflix and video meeting service Zoom. Both of those Silicon Valley companies have been thriving during a crisis that has left millions of people trying to find ways to entertain themselves and still see their family, friends and co-workers.
“Scandal” cast will reunite for online script reading for hurricane relief in western North Carolina
The cast of ABC's hit political drama "Scandal" may need to brush up on their snappy, speedy delivery known as "Scandal-pace," because they're reuniting for a good cause. Its stars including Kerry Washington, Tony Goldwyn and Bellamy Young will take part in a live virtual script reading on Nov. 17 to raise money for hurricane relief in western North Carolina.
Beginning Friday, fans can go online and donate to reserve a spot for the online reading. Proceeds will benefit United Way of North Carolina. Everyone who donates will be able to take part in a virtual pre-event with the cast and Shonda Rhimes will give an introduction.
Additional guest stars will also be announced. The online fundraising platform Prizeo is also holding a contest where one person who donates online via their site will be selected to read a role from the script with the actors. The winner should not worry about the "Scandal"-pace, assured Young over Zoom.
"Whomever the lucky reader is can read at whatever pace they want," she said.
Young, who played Mellie Young, the first lady and later Republican presidential nominee on "Scandal," was born and raised in Asheville, North Carolina. She came up with the idea for the effort with a friend and took it to her fellow "Scandal" actors, who all jumped on board. Young said this is the first script reading the cast has all done together since the show ended after seven seasons in 2018.
Which episode they will be reading has not been announced yet.
Young said it's "been devastating" to see so many parts of her hometown badly damaged by Hurricane Helene, which ravaged western North Carolina one month ago.
To research the best use for donations, Young spoke with numerous political leaders, including North... Read More