Alphabet’s second quarter results will be under close watch tomorrow, as it was confirmed the company will include the recent EU antitrust $5.07bn (£3.89bn) fine against Google’s Android operating software.
Due to be released tomorrow night after US markets close, Google’s parent company Alphabet is no longer expected to beat consumer estimates and has been awarded a “sell” rating by a number of brokers since the fine was announced on Wednesday.
The company’s net income for the quarter is forecast at just over $6.7bn, according to S&P Global Forecasts. As a result of last week’s non tax-deductible fine, Alphabet is set to lose roughly 75 per cent of that number to the EU.
Earnings per share will also fall drastically from previous forecasts of $9.54 at a year-on-year increase of 89 per cent, predicted by analysts before Alphabet announced in a regulatory filing that the fine will be taken into account tomorrow instead of in the next quarter.
An investigation into Google’s free-to-use Android software by a Brussels watchdog found the US firm guilty of forcing smartphone makers to favour its own products such as Search and Chrome if they wanted to run on Android, which is used on 80 per cent of the world’s phones.
Google also surprised investors when it included a separate EU antitrust fine for $2.7bn its second quarter results at this same time last year, despite an ongoing appeal over the ruling. The firm awaits a decision on a third investigation into its Adsense product, accused of abusing its dominant market position.
This year, Google is expected to generate $84.9bn in total net digital ad revenue worldwide, giving the firm a 31 per cent global market share according to Emarketer. The firm will also remain on top of the worldwide mobile ads market, capturing a third of the sector, as well as owning a staggering 59 per cent of the global search market.
Streaming offshoot Youtube is forecast to be the leading over-the-top video service in the US, leaving the likes of Amazon, Netflix and Hulu in the dust with 192m users in 2018 at a 96.1 per cent market share.
Alphabet’s share price has risen 16 per cent so far this year, and have returned 22 per cent in the last 12 months, according to Zacks Investment Research.
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