Big tech firms show robust results in pandemic-hit quarter; Amazon doubles profits

Silicon ValleyUpdated: Jul 31, 2020, 11:46 PM IST

The logos of Amazon, Apple, Facebook and Google are seen in a combination photo. Photograph:(Reuters)

Story highlights

The reports illustrated the increasing importance of social networks, digital content and connected devices which have been seen as a lifeline to pandemic-hit consumers.

Big tech firms delivered robust results Thursday, underscoring growing consumer reliance on giants like Amazon during the pandemic as well as their extraordinary economic power -- the subject of a heated US congressional hearing a day earlier.

The results from Apple, Amazon, Facebook and Google parent Alphabet -- ironically the same firms whose chief executives were in the spotlight at an antitrust hearing in Congress this week -- were largely better than expected.

The reports illustrated the increasing importance of social networks, digital content and connected devices which have been seen as a lifeline to pandemic-hit consumers.

Apple profits rose eight percent to $11.2 billion and revenues were up 11 percent to $59.7 billion in the three months ending June 27.

The California tech giant saw a modest increase in iPhone sales, with more significant rise for accessories and services such as its apps and digital content.

"In uncertain times, this performance is a testament to the important role our products play in our customers' lives and to Apple's relentless innovation," chief executive Tim Cook said.

Analyst Daniel Ives at Wedbush Securities said the results show momentum for Apple as it readies its new iPhone 12.

"The stage is setting up for a massive pent up iPhone 12 cycle heading into the fall," Ives said in a research note. 

Amazon meanwhile said profits nearly doubled to $5.2 billion on sales that climbed 40 percent to $88.9 billion.

"This was another highly unusual quarter, and I couldn't be more proud of and grateful to our employees around the globe," said Amazon founder and chief executive Jeff Bezos.

Amid rising sales in its grocery, video and cloud computing operations, Amazon has told investors it expects to spend all its profits this year on costs related to keeping employees and customers safe during the pandemic.

"This phenomenal set of results from Amazon underlines how much shopping habits shifted during the pandemic period both in the US and around the world," Neil Saunders of the research firm GlobalData Retail said.

"Many of those changes were to Amazon's advantage as shoppers became increasingly digital and went online to fulfil their various needs."

Facebook said its profits doubled to $5.2 billion compared with the same period last year, when it paid a hefty fine to US regulators.

Revenue rose 11 percent to $18.7 billion, suggesting minimal impact from an ad boycott of the leading social network over its handling of hateful content and misinformation.

Facebook said its core social network grew to 2.7 billion while its total audience including its "family" of apps had more than 3.1 billion users.

Analyst Debra Aho Williamson of eMarketer said Facebook's ad business "was negatively affected by the global pandemic, but the impact was much less than many had expected."

Williamson said she believes Instagram "has played a major role in Facebook's ability to withstand the effects of the pandemic," even though details from the platform were not disclosed.

Alphabet reported a rare drop in revenue and profit in a quarterly update that nonetheless topped market expectations.

Profit slumped some 30 percent to $6.96 billion from a year for the online giant that relies on digital advertising for most of its income.

Revenues dipped two percent to $38 billion, as chief financial officer Ruth Porat said: "We continue to navigate through a difficult global economic environment."

Alphabet shares edged up slightly in after-market trades following the release, while the other firms showed stronger share increases.

As people hunkered down at home due to the pandemic, Alphabet saw growth in demand for entertainment content at YouTube and its online Play shop as well for cloud services being relied on increasingly for learning, work and online commerce.

In Washington on Wednesday, the CEOs of the four tech firms faced an onslaught of criticism from US lawmakers at an antitrust hearing which could lay the groundwork for tougher regulation of the major internet platforms.

"Simply put, they have too much power," said Representative David Cicilline, a Democrat from the state of Rhode Island who chairs the panel.

Cicilline said the hearing made clear that the firms "have monopoly power -- some need to be broken up, all need to be properly regulated and held accountable."