Google's Cloud Business Turns Profitable For the First Time (cnbc.com) 17
Google's cloud business has turned profitable for the first time in the three years it's been reporting operating metrics. CNBC reports: The segment generated $191 million in operating income on $7.45 billion in revenue in the first quarter, according to Alphabet's earnings statement. In the year-ago quarter, the unit reported a $706 million loss on $5.82 billion in revenue. The cloud business includes the Google Cloud Platform, which rents out cloud infrastructure and services that companies can use to build and run their own applications, as well as Google Workspace productivity software subscriptions. Cloud customers include Deutsche Bank, Major League Baseball, PayPal and UPS.
And in another year it will be abandoned... (Score:1)
because it didn't make enough money when it turned profitable.
I'm hoping this future doesn't come to pass, but it's Google.
Question (Score:2)
Re: (Score:2)
Dunno, but now they're showing a profit on GCP, it's less likely they'll kill it off.
This is the trend my friend... (Score:2)
-706/5820=-12.13%
191/7450=2.56%
Hopefully the trend continues because 2.56% isn't a sustainable ROI.
Re: (Score:2)
accounting magic? (Score:4, Interesting)
perhaps Google didn't actually make any money and this paper profit is due to accounting trickery? I'm not well versed in accounting practices, but this snippet from their earnings release [abc.xyz] seems a bit suspicious:
Change in Useful Lives of Our Server and Network Equipment
In January 2023, we completed an assessment of the useful lives of our servers and network equipment and
adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain
network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal
year 2023 and the effect for the three months ended March 31, 2023 was a reduction in depreciation expense of
$988 million and an increase in net income of $770 million, or $0.06 per basic and $0.06 per diluted share.
Re: (Score:2, Insightful)
I call this the Digital Ocean problem. You already have long term liabilities on that hardware, and now its time to refresh them introducing more long term liabilities. At some point you need to keep the older hardware through maturity, which it seems google is doing here. Digital Ocean had this problem 3 years ago and did the exact same thing.
Food for thought: if Digital Ocean busts (or is acquired and assimilated) then expect GCP to be not so far behind it. At the very least, I would expect "legacy com
Re: accounting magic? (Score:3)
Predictions like yours never come true.
Re: (Score:3)
perhaps Google didn't actually make any money and this paper profit is due to accounting trickery? I'm not well versed in accounting practices, but this snippet from their earnings release [abc.xyz] seems a bit suspicious:
The purpose of the earnings report, as seen by the company, is to show the company in whatever light the leadership desires. It is the job of accounting to make it happen. Playing around with depreciation is a great way to do this, if you have a significant amount of assets. But the bag of tricks is deep and accounting is a very creative job at this level.
In the long term there is going to be a need to adjust your earnings report back to reality. You have to take the losses sooner or later. But the stock ma
Are you some kind of a simpleton? (Score:1)
Companies are always profitable.
They simply choose to have a net loss by investing so they don't pay taxes.
Did you honestly think they were losing billions over the year and nobody said anything?
Re: (Score:2)
> Did you honestly think they were losing billions over the year and nobody said anything?
I'm pretty sure that's exactly how Alameda Research and FTX worked.
That means they are (Score:1)
...doing it wrong. In the cloud biz you are supposed to subsidize growth in order to take market share away from competitors because the network effect means winner takes most, per compatibility, vendor-lock-in, skillsets, etc.
Re: (Score:1)
exactly
Re: (Score:1)
Re: That means they are (Score:3)
Maybe Google realized they are not going to take most of the market so they may as well take profit.
Google cloud is about a third the size of AWS and half the size of Microsoft's terrible offering.
Google started with all the experience and all the advantages but they are badly losing the cloud race. They just don't know how to make what the customer wants.
Re: (Score:2)
Google has ADHD. They can't focus on improving, instead do burn and churn.