Internet titans Google and Amazon came under an investor cloud after posting disappointing sales updates, with the search leader also on the defensive for reportedly hushing up sexual misconduct.
Two of the world’s most valuable companies suffered slides in their share prices after releasing their quarterly earnings, declines that fuelled pessimism in Asian and European stock markets on Friday.
While both on Thursday reported bumper profits in the past quarter, revenues came up short of expectations at Google and Amazon spooked the markets with a so-so forecast for the all-important holiday season coming up.
“Given the current market backdrop, your earnings report has to be perfect or your stock will get punished,” said Vic Anthony, an analyst at Aegis Capital Corp.
Contributing to Google’s bad day was a New York Times report that one senior employee, Android creator Andy Rubin, received an exit package worth $90 million as he faced allegations of misconduct, and that Google had covered up other claims of sexual harassment.
Google chief executive Sundar Pichai sent an email to employees stating that 48 people had been terminated for sexual harassment in the past two years, including 13 who were senior managers and above, but that none received any exit package.
Google’s parent company Alphabet said its third-quarter net profit rose 36 percent to $9.2 billion, fueled by gains in digital advertising delivered online and on smartphones.
Alphabet has been working to become more diversified, with its own Pixel brand of smartphones and tablets, its Google Home smart speakers which are gaining ground on market leader Amazon, and services like cloud computing, another area where Amazon is strong. “Our hardware efforts are picking up real momentum,” Pichai told analysts on a conference call.
But Alphabet’s revenues fell short of forecasts, rising 21 per cent to $33.7 billion in the three months ending in September, compared with the same period a year earlier.
For its part Amazon stock was down 8.66 per cent ahead of Friday’s opening, despite seeing its quarterly net profit grow ten-fold from a year earlier to $2.9 billion.