Google Parent And Microsoft Miss Expectations

Shares (Berlin: DI6.BE - news) in Google parent firm Alphabet (Xetra: ABEA.DE - news) and Microsoft (Euronext: MSF.NX - news) fell in after-hours trading in New York after disappointing first quarter results.

Both tech firms updated investors on their progress after the bell on Wall Street and Alphabet, the world's second-largest company by market capitalisation, suffered most - losing more than 6% or $32bn from its market value in the process.

The company, that oversees a massive advertising network that includes Google's dominant search engine, the Android operating system for smartphones, YouTube and Gmail said revenue rose to $20.2bn (£14bn).

It (Other OTC: ITGL - news) represented a rise of 17% on the same January-March period a year earlier while profits topped £4.2bn (£2.9bn) - up 20%.

But both metrics missed analysts' estimates.

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Losses also deepened at its Other Bets business, which includes its so-called 'moonshot' ventures such as driverless cars, with a figure of $802m (£559m) reported by the company.

Alphabet said its fundamentals were strong - though cost-per-click, or the average price of online ads, fell 9%.

Chief financial officer Ruth Porat said in a conference call with investors: "As a result of the ongoing strength of the US dollar, we realised a negative currency impact on our revenues year-over-year of $762m".

Microsoft's results - for the same period - showed its cloud business still cannot make up for weakness in its core PC market.

Revenue fell to $20.53bn (£14.3bn) from $21.7bn while profits fell to $3.76bn (£2.6bn) with the company blaming a higher than expected tax rate.

While revenue in Microsoft's intelligent cloud division, which includes the Azure (Other OTC: AZRH - news) cloud infrastructure and services business, rose more than 3%, weakness in the personal computing market damaged demand for one-time licences for some of its products.

PC shipments fell 11.5% worldwide in the first quarter of the year, according to research firm IDC, underlying the challenge.

Microsoft shares 5% in extended trading.

The firms were not alone in bleeding value, with Visa (Xetra: A0NC7B - news) and Starbucks (Swiss: SBUX.SW - news) also taking hits of around 4% following the release of their latest earnings.