Amazon earnings beat expectations on strong COVID-19 sales, Alphabet sees rise in ad revenue

Yahoo Finance’s Adam Shapiro and Julie Hyman break down earnings reports from Amazon, Alphabet, Facebook, and Apple.

Video Transcript

JULIE HYMAN: Let’s start with Amazon, those shares are down about 3.8% right now. And it looks like it’s because the forecast for the fourth quarter. The company said, sales are going to be between $112 billion and $112 billion, it’s a pretty wide range. Analysts had been looking towards the lower end of that range, but nonetheless, that could be a source of disappointment. Of course, the shares are still up quite a lot this year. Fourth quarter operating income, according to Amazon, is also going to be hit by $4 billion in costs related to COVID 19. To things like continued distancing at the warehouses for example, it was only $2 billion in costs last quarter.

Meantime, third quarter earnings did blow away estimates, sales beat estimates as well. Amazon Web Services saw 29% increase in its revenue, advertising revenue was up by 51%, and subscription services, which of course, includes Amazon Prime, rose by 33%, Adam.

ADAM SHAPIRO: And then there’s Alphabet, their third quarter shares up more than 4% right now. And they had beat analysts’ expectations providing a better look at the effect of coronavirus pandemic on digital advertising. So here the numbers, revenue ex-TAC traffic acquisition cost was $38.01 billion, street was expecting $35 billion. They said, quote “Total revenue $46.2 billion in the third quarter, reflected broad based growth led by an increase in advertisers spend in search, and YouTube, as well has continued strength in Google Cloud, and Google Play.” That came from Alphabet’s chief financial officer. Sundar Pichai, said the company believes quote, “Our products are creating significant consumer benefits and will confidently make our case.” In regards to the antitrust lawsuit that they face from DOJ.

So Google Cloud, $3.4 billion versus the $3.3 billion that had been expected. Also YouTube advertising, $5 billion. Well above the $4.3 billion that was expected. Traffic acquisition costs, by the way, what they paid to draw traffic to the search, was $8 billion versus $7.6 billion, is what the estimates were for that. Julie?

JULIE HYMAN: Facebook is another one that’s getting hit this morning, it’s down about 6% right now. It has to do with the users in the US and Canada. Daily active users last quarter, falling to 196 million from 198 million. That’s a quarter over quarter change. And the company says that, that same number is going to remain flat or decrease in the fourth quarter. The European user base meantime, has been flat at around 305 million daily active users for the third consecutive quarters, for three consecutive quarters, court, quarters, now, excuse me.

At the same time earnings per share did beat estimates. Revenue did beat estimates. Ad revenue doesn’t seem to have been hurt unduly by that boycott that was going on in mid summer. Ad revenue for Facebook rose by 22% in the quarter.

ADAM SHAPIRO: And then there’s Apple, shares are down right now about 6%. Now their report beat expectations but they fell on worse than expected drop in iPhone sales, especially in China during the third quarter. Not to worry we’ve got the iPhone 12 coming up. Want to let you know later in the hour we’re going to hear from Dan Howley about which iPhone 12 you may want to consider buying.

So revenue Q4, because this is their fiscal fourth quarter $64.7 billion. It was a beat because the street was expecting $63.4 billion and they had $64.04 billion year over year. So at least they are growing. Revenue from Apple’s Services, things like Apple News, Apple TV, iCloud, that hit a quarterly record during the three months, which ended in September. Just to give you some of the numbers, $14.5 billion from $13.16 billion in the third quarter, for services. And $12.5 billion a year over year. So again 14.5 the magic number there.

Mac sales, OK, the pandemic people are buying Macs, $9.03 billion. And then wearables and home accessories, $7.8 billion. Again on iPhone sales dropped nearly 21% to $26.4 billion, that missed expectations. But here comes the iPhone 12.