While the majority of the world economy suffered earlier this year, the biggest companies in the tech sector seemed resistant to the slowdown, growing as the world worked, learned and shopped from home.
US-based Amazon, Apple, Alphabet (Google’s parent company) and Facebook recently posted profits that demonstrated how a turnaround will provide another opportunity to help them produce a level of wealth that has not been seen in a single industry in decades.
With an established user audience and financial capital to press their lead in areas such as cloud computing, eCommerce and digital ads, the businesses proved again that their bottom line had little effect from economic stagnation, ambitious young rivals and persistent antitrust regulators.
Combined, the four firms posted a net profit of $38 billion for the quarter.
As the pandemic accelerated the transition to online shopping, Amazon reported record sales and an almost 200 per cent increase in profits. Facebook had another blockbuster quarter, despite a boycott of its ads. The record quarterly net profit of Alphabet was up 59 percent, as advertisers rushed money into Google search and YouTube advertising. Meanwhile, revenues for Apple improved even though the pandemic forced it to push back the release of the iPhone 12 to October.
Earlier, Amazon’s closest cloud computing rival, Microsoft, also recorded its most profitable quarter, rising 30 percent from a year earlier.
When compared to the final quarter of the year, the third-quarter boom of the big techs might look modest. For Apple, it’s when newly launched iPhones will be bought by customers. And the shopping peak at the end of the year means that many shoppers turn to Amazon for gifts, while advertisers during the holidays rely on Google and Facebook for digital ads.
Amazon
In the latest quarter, the pandemic-fueled rise in online shopping drove Amazon to a milestone in terms of both sales and profits. Sales were $96.1 billion, up 37 percent from the previous year, and profits rose to $6.3 billion.
The quarter did not include Prime Day’s regular boost, Amazon’s annual deal bonanza, which was postponed to October. And despite a building boom, the profit grew, with Amazon this year expanding its distribution infrastructure by 50 percent. The organization hired nearly 250,000 employees in the quarter, surpassing more than a million jobs for the first time.
As companies continued their shift to cloud computing, the lucrative Amazon Web Services division grew 29 percent.
Apple
The delay in the release of the iPhone 12 meant that Apple will face a difficult comparison with the same quarter last year that included iPhone 11 sales. As a result, in the quarter, iPhone sales fell more than 20 percent.
But the total sales of Apple still grew 1% to $64.7 billion, indicating the growing importance of other parts of the market of the company.
The services division of Apple, which includes App Store sales and offerings such as Apple Music, increased 16 percent to $14.5 billion. Sales for iPads rose 46 percent, Mac computers 29 percent and wearables 21 percent.
Facebook
In the third quarter, Facebook’s revenue increased 22 percent from a year ago, to $21.2 billion, while earnings soared 29 percent to $7.84 billion. According to data, the results exceeded analysts’ forecasts of $19.8 billion in revenue and profits of $5.53 billion.
Despite a wide-ranging boycott by advertisers this year, over issues of hatred and toxic speech on the web, Facebook had strong results. While Stop Hate for Profit caused several of Facebook’s top advertisers to reduce their spending, the overall impact was brief.
The company has also continued to attract users. Every day, more than 1.82 billion individuals use the Facebook app, up 12 percent from a year ago, it said. More than 2.54 billion people currently use one or more of the app family of Facebook everyday which includes Instagram, WhatsApp, Messenger or Facebook.
Alphabet
Alphabet rebounded with its highest-ever profit after its first-ever drop in quarterly revenue in the second quarter of the year. The strength came from Google, with search advertising revenue increasing by 6 percent and ad spending on YouTube rising by 32 percent. The cloud computing division of Google grew 45 percent.
This year, when COVID-19 began to spread, as advertisers slowed spending with Google, Alphabet’s company took a big hit. Yet advertisers have returned as the economy has improved and businesses have found their footing.
In the third quarter, Alphabet reported a net profit of $11.25 billion as revenue rose 14 percent to $46.1 billion. The improved profitability reflected efforts to cut costs during the economic downturn, including a hiring slowdown, said Mr. Ruth Porat, Alphabet’s chief financial officer.
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