Stephen Lam, Getty Images
Google Senior Vice President for Technical Infrastructure Urs Houmllzle speaks at the companyrsquos 2014 IO Developers Conference

TECH ROUNDUP: Google Shows Signs of Cloud Progress

July 29, 2016
Amazon ramps up profit with cloud, too. ... Microsoft trims more smartphone jobs. ... Sony reports quarterly profit, warns of falling sales.

Google has spent years telling Wall Street its investments in non-advertising businesses will eventually pay off. Thursday’s results suggest that’s beginning to happen.

Google parent Alphabet Inc. reported second-quarter earnings and sales that beat analysts’ estimates. The "Other" part of the Google business saw sales jump 33% to a record $2.17 billion. Growth in Google’s cloud-computing and corporate software businesses drove the gains. The shares rose 4.6% in early trading Friday to $800.83.

Alphabet board member Diane Greene was brought in to run Google’s cloud and work apps businesses in November. Since then, she’s made hires in sales, marketing, global alliances, industry solutions and professional services, Google CEO Sundar Pichai said during a conference call with analysts Thursday. 

Alphabet added more than 2,000 employees in the second quarter, and most were engineers and product managers to support growth in priority areas such as cloud and apps, Chief Financial Officer Ruth Porat said on the call.

Those hires, combined with new products, have helped Google sell cloud-based software and services more effectively to large companies — something it struggled to do before Greene arrived. "We now have key leadership in place and centralized teams," Pichai said. "I see a shift to a world-class enterprise approach and it’s definitely having an impact on the type of conversations we are having."

Cloud computing is a strategic growth area for Google, which is seeking to turn the infrastructure it built for its mammoth web operations into services that other businesses can rent. The market for cloud services in 2016 is worth about $204 billion, according to Gartner. Though Google is praised for technical expertise, it is fourth in cloud services behind Amazon, Microsoft and IBM, according to Synergy Research Group. 

On Thursday, Amazon Web Services, Amazon’s cloud business, reported a 58% jump in quarterly revenue to $2.89 billion. Microsoft’s Azure cloud revenue doubled in the same period. So Google’s Greene still has work to do to catch up.

Alphabet’s longer-term "Other Bets’ businesses, which include self-driving cars, fast internet services, and health-care ventures, saw second-quarter sales more than double to $185 million from $74 million a year earlier. Operating losses in the division rose as well, but at a slower rate than sales climbed.

By Jack Clark, Bloomberg

Amazon Ramps Up Profit With Cloud, Too

Amazon announced Thursday that profit in the second quarter surged ninefold as cloud computing and other services helped produce a fifth consecutive profit. Net profit soared to $857 million from $92 million a year earlier, with revenues jumping 31% to $30.4 billion.

While Amazon developed a reputation for delivering little or no profit in its retail operations, its earnings have been growing over the past year as it expands into video and new delivery services and boosts its cloud computing unit, Amazon Web Services (AWS).

The strong profit came a year after earnings of $92 million, which began a string of improvements for Amazon.

Amazon shares rose 2% in after-hours trade on the results.

Copyright Agence France-Presse, 2016

Justin Sullivan, Getty Images

Microsoft Trims More Smartphone Jobs

Microsoft is cutting more jobs from its smartphone hardware and global sales divisions by shedding an additional 2,850 positions, the company said Thursday. The news came in a corporate annual report filing to the Securities and Exchange Commission.

It noted that the company had announced in May it was cutting 1,850 jobs and that the new cuts were "an extension of the earlier plan." The cuts are expected to be completed by the end of June 2017. As of late last month, Microsoft employed about 114,000 people.

Part of Microsoft's strategy "involves focusing our phone devices on a narrower range of customer categories and differentiating through the combination of hardware and software we are uniquely positioned to offer," the filing said. "As anticipated, our change in phone strategy resulted in a reduction in units sold and associated expenses in fiscal year 2016, and this trend is expected to continue in fiscal year 2017."

Microsoft purchased Nokia in 2013 in a bid to get a leg up in mobile. Nokia was the world's leading mobile phone maker from 1998 until 2011 when it bet on Microsoft's Windows mobile platform which proved to be a flop.

Copyright Agence France-Presse, 2016

Sony Warns of Falling Sales, Still Reports Profit

Sony cut its sales forecast for the current fiscal year on Friday, citing the impact of a surging yen and slower smartphone sales, as net profit also took a hit.

But the tech company managed to stay in the black as strong sales of its PlayStation 4 offset negative impacts from a sharp rise in the yen and deadly earthquakes in Japan earlier this year that temporarily shuttered its regional factories.

Revenue in the year to March 2017 will be down 5.1% from its previous forecast to 7.4 trillion yen ($71 billion), Sony said, but it kept its projection of an 80 billion yen net profit unchanged. Sony's net profit in the April-June quarter was down about 74% from a year ago, partly owing to a one-time gain a year earlier. The lowered figure still beat analysts' expectations of a loss.

Sony previously warned that a pair of deadly quakes in Japan in April would dent its financial results. The quakes, which caused major damage in southern Kyushu and claimed dozens of lives, forced major firms including Sony and Toyota to temporarily shutter factories, hitting production and sales. Costs also included repairing damaged buildings.

Copyright Agence France-Presse, 2016

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Licensed content from Bloomberg, copyright 2016.

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Agence France-Presse

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