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Market Views

Google riding on hot steam, as earnings growth surges by 23%

Shares of Google’s parent company Alphabet gained more than 7% during after-hours trading.

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Google building its own debit card, Google’s advertising business faces breakup, Google supports media firms in Nigeria, others with $39.5 million

Shares of Google‘s parent company, Alphabet, gained more than 7% during after-hours trading, after the world’s biggest online company reported 23% revenue growth and topped estimates for earnings.

Alphabet brought in $46.43 billion in revenue for the quarter when deducting traffic acquisition costs, up from $37.57 billion a year ago. Overall, the technology giant surged by 23% year-on-year.

This was also the first time the leading tech brand revealed results on its Cloud segment, revealing that the company earned about $3.83 billion in revenue and had an operating loss of $1.24 billion in Q4.

READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

For the year, Cloud segments brought in $13.06 billion in revenue and reported an operating loss of $5.6 billion.

Ruth Porat, CFO of Google and Alphabet, said: “Our strong fourth-quarter performance, with revenues of $56.9 billion, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year.
Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see.”

READ: Facebook, Instagram and WhatsApp user base top 3.3 billion, Q4 revenue of $28 billion

Highlights of Alphabet’s latest earning results include:

  • Earnings: $22.30 per share, adjusted, vs., $15.90 per share as expected by analysts, according to Refinitiv.
  • Revenue: $56.90 billion, vs. $53.13 billion as expected by analysts, according to Refinitiv.
  • Google Cloud: $3.83 billion, vs. $3.81 billion as expected by analysts, according to StreetAccount.
  • YouTube ads: $6.89 billion, vs. $6.11 billion as expected by analysts, according to StreetAccount.
  • Traffic acquisition costs (TAC): $10.47 billion, vs. $9.32 billion as expected by analysts, according to StreetAccount.

READ: Google’s advertising revenue plunges

On its latest earnings results, Sundar Pichai, CEO of Google and Alphabet, said, “Our strong results this quarter reflect the helpfulness of our products and services to people and businesses, as well as the accelerating transition to online services and the cloud.

“Google succeeds when we help our customers and partners succeed, and we see significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future.”

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

1 Comment

1 Comment

  1. MXMLLN

    February 3, 2021 at 4:13 pm

    Thanks for the update, Olumide.
    I’d like to sell a few shares of Google, but would feel like an idiot if they announced a stock split in 2 weeks. How long should I wait to hear about a possible split? Do I have to wait until the 2020 Q1 earnings report?

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Market Views

Nigerian stocks plunge, as WEMA, CHAMPION, MANSARD slump

The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session.

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Nigerian banking stocks remain most liquid stocks, as investors gain N25.1 billion, DANGOTE CEMENT, OKOMUOIL and GUINNESS drag Nigerian Stock market down,  SEPLAT, GUINNESS, Breaks Nigerian Bourse Support Levels, Investors Lose N49 Billion  

Nigerian stocks wrapped up the week on a bearish note after the benchmark index registered its third negative close in the last five sessions.

  • Sentiments notably picked up where they left off yesterday, as selloffs persisted in bellwether ticker – ZENITHBANK (-1.55%) as well as in Telco giant – MTN Nigeria (-3.28%).
  • The 74 basis points pullback recorded today kept the All Share Index return firmly rooted in the red and also lowering the Year date returns to -1.88%.
  • Save for the Oil and Gas (+0.25%) index lifted by sustained interest in OANDO (+2.99%), all other sectors closed in the negative territory.
  • The Insurance (-2.32%), Banking (-0.48%), Consumer Goods (-0.40%), and Industrial Goods (-0.19) indices declined following price dips in MANSARD (-5.36%), ZENITHBANK (-1.55%), INTBREW (-3.65%), and WAPCO (-2.94%) respectively.
  • The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session

Top gainers

  1. LASACO down 9.82% to close at N1.23
  2. MBENEFIT down 8.11% to close at N0.37
  3. COURTVILLE down 5.00% to close at N0.21
  4. OANDO down 2.99% to close at N3.45
  5. NAHCO down 2.70% to close at N2.28

Top losers

  1. WEMABANK down 10.00% to close at N0.63
  2. CHAMPION down 10.00% to close at N2.52
  3. SUNUASSUR down 9.59% to close at N0.66
  4. AFRIPRUD down 5.74% to close at N5.75
  5. MANSARD down 5.36% to close at N1.06

Outlook

Nigerian stocks ended the last trading session of the week on a bearish note amid profit-taking across the market spectrum.

  • Downtrend was driven by price depreciation medium capitalized stocks amongst which are; WEMA, CHAMPION, MANSARD.
  • That being said, Nairametrics envisages cautious buying on the account that certain market indicators reveal investors are taking some of their gains across the market spectrum.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.

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Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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