A breakdown of Big Tech's big Q2 earnings

Marco Green
July 31, 2020

However, Thursday's grim second quarter GDP reading, which showed an annualized contraction of 32.9% - the steepest since records began - as well as an uptick in weekly jobless claims, were powerful reminders for investors that any domestic recovery will be predicated on taming the spread of the cornavirus, which has infected 4.6 million Americans and killed at least 154,000.

With more people staying at home to entertain themselves, while also turning to online shopping, the four Big Tech firms that were defending their company practices at Congress this week managed to rake in a combined $28.6bn in profits in a single quarter. A enormous sum. The market value of the four companies on Wall Street rose by $ 250 billion.

In the midst of the worst USA economic downturn since the Great Depression of the 1930s, Amazon posted the highest profit in its 26-year history. Amazon boss Jeff Bezos called it "another highly unusual quarter" while thanking the company's employees. In the course of the corona lockdown, the world's largest online mail-order business with its mass business closings performed significantly better than expected by experts.

The deal confirmed Amazon only had to pay 15% share for Amazon Prime Video sign-ups made via the Apple TV. The group was initially somewhat overwhelmed with the high level of activity in the pandemic, so 175,000 additional employees were hired. In the second quarter, Amazon said, its revenues grew 40% to $88.9 billion, while net income doubled year-over-year to $5.2 billion, or $10.30 per share.

Alphabet shares were up less than 1 per cent after the Q2 earnings report.

The company also saw a 25.6pc growth year-on-year in its "other" revenues, which covers hardware and Google Play purchases.

Riding on surging online sales during the pandemic as people stayed home, Amazon reported a 40 per cent increase in net sales to USD88.9 billion, compared with USD63.4 billion in the same period past year. However, advertising revenue did not keep pace, because large customers in the travel industry, for example, were forced to save by the Corona crisis.

Revenue rose 11 percent to 18.7 billion USA dollars, suggesting minimal impact from an ad boycott of the leading social network over its handling of hateful content and misinformation. Apple posted $US5.5 billion in revenue for its wearables business in last year's third quarter.

The data shocked analysts on Wall Street. No wonder, when it became clear the antitrust hearing would be delayed, that the rescheduled hearing took place before earnings. Congress is working hard to smash the corporations.

Wall Street futures extended gains Friday, powered by gains for the biggest US tech stocks after blockbuster earnings after the close of trading yesterday, but lingering concerns for the fate of the global economic recovery, and rising coronavirus infection rates, continue to cloud investor sentiment.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER