The Times - UK (2020-07-31)

36 2GM Friday July 31 2020 | the times

Business

Britain’s railways are on the verge of

being formally renationalised with

billions of pounds of liabilities carried

by the train companies being taken on

to the public books.

It is understood that the Office for

National Statistics (ONS) could

Rail decision to bring public control of train franchises a step closer

Robert Lea Industrial Editor

The coronavirus pandemic has caused

Google to report the first ever decline in

year-on-year sales in its 22-year history

as advertising sales took a bad hit.

Alphabet, Google’s parent company,

reported a 2 per cent fall in revenue to

$38.2 billion for the second quarter,

down from $38.9 billion a year earlier.

The previous lowest quarter of sales

growth for Google was a 0.6 per cent

gain in the second quarter of 2009

during the height of the recession.

The latest fall was down to a drop in

advertising revenues, with a $2.6 billion

decline from a year earlier to $29.9 bil-

lion, as some of Google’s biggest adver-

tisers, such as travel companies and

consumer brands, cut back their spend-

ing in the face of financial uncertainty.

Google blamed its drop in revenue on

the “difficult global economic environ-

ment” but said it had seen “gradual

improvement” in its ads business and

strong growth in its Google Cloud arm

and other divisions.

Alphabet was created as Google’s

parent company in 2015 and the bulk of

Tim Cook, chief executive, suggested

that sales had been boosted by the

launch of its more affordable SE hand-

set in the spring.

“Apple’s record June quarter was

driven by double-digit growth in both

products and services and growth in

each of our geographic segments,” Mr

Cook said.

Sales rose across all its product cate-

gories and in its services segment, a key

focus over recent years as sales of its

hardware have tapered, increased by

14.8 per cent to $13.16 billion, compared

with $11.46 billion a year ago. Apple

now has 550 million paying subscribers

on its platform, up from 515 million in

the previous quarter, Mr Cook told the

Reuters news agency.

The company announced a four-for-

one stock split yesterday meaning that,

for every share an investor holds, they

will be handed three more. It said that

would “make the stock more accessible

to a broader base of investors”.

The change, which is due to take

place in a month’s time, follows a similar

move by Apple six years ago. It will

make single shares in the business

cheaper. In 2014, the price per share fell

from above $600 to about $92.

It has declared a cash dividend of

$0.82 per share, payable on August 13.

Sky pays

price for

sport’s

time off

S

ky’s revenues fell

by more than 10

per cent in the

second quarter

after the Premier

League and other sports

events were disrupted

and advertisers slashed

spending.

Turnover dropped 13

per cent to $4.1 billion

after Sky allowed

customers to suspend

monthly subscription

payments during the

hiatus in live sport,

according to results

from Comcast, its

American parent. Its

advertising sales

slumped by 41 per cent

as marketing chiefs

reined in spending and

the British and Italian

governments placed

curbs on gambling

adverts.

Sky said its customer

numbers across Europe

decreased by 214,000 to

23.7 million during the

second quarter and that

its underlying profits

dipped 3 per cent to

$749 million. The

broadcaster has lost 5

per cent of its sports

subscribers since March.

Comcast, valued at

$200 billion, is one of

the world’s largest media

companies. It completed

its £31 billion takeover of

Sky in October 2018,

and has recently

launched a streaming

TV and movie service

called Peacock to

compete with Amazon

Prime Video and

Netflix.

Entertainment groups

like Comcast and Disney

have been battered by

the Covid-19 pandemic,

which has forced them

to shut theme parks and

cinemas, delay film

releases and suspend

productions. Comcast

said yesterday that the

shutdown had hit its

NBC Universal division,

which includes TV

stations, Hollywood and

theme park divisions,

particularly hard.

Revenue slid 12 per

cent to $23.7 billion

while net income fell 4.4

per cent to $2.99 billion,

or 65 cents per share.

Excluding exceptional

items, earnings were 69

cents per share.

The results were more

robust than expected,

with Wall Street analysts

forecasting $23.6 billion

in turnover and earnings

per share of 55 cents.

Comcast stock was

broadly unchanged in a

weaker market.

The company said it

had signed up 10 million

customers since April to

its Peacock service,

which is free for

Comcast subscribers

and offers a free tier

with advertising.

Comcast has said it

hopes to have between

30 million and 35

million users by 2024.

NBC Universal’s

revenue fell 25 per cent

to $6.1 billion. The

company reopened its

Universal Studios Japan

and its Universal park in

Orlando, Florida, last

month despite a surge of

virus cases in the state.

Comcast’s theme park

business saw sales

shrink to $87 million in

the second quarter from

$1.46 billion in the same

period a year ago.

Liverpool had more to

celebrate than Sky, which

saw revenue fall as

subscribers were allowed

to suspend payments

LAURENCE GRIFFITHS/GETTY IMAGES

announce a decision today on the

reclassification of the status of the

privately owned operators, which are

on financial life support from the

Treasury after the government intro-

duced special measures because of the

collapse in fare revenues.

Any nationalisation would follow

that of Network Rail, the infrastruc-

ture, track and large stations operator,

whose £40 billion of debt was taken on

to the Treasury books as the Depart-

ment for Transport (DfT) took control

of its operation in 2012.

The emergency measures agree-

ments announced by the DfT in the

spring run to September 20. Those

measures are expected to be extended.

Rail industry executives are briefing

that an ONS reclassification for

“accounting reasons” does not necessa-

rily lead to “operational nationalisa-

tion”. A senior industry source said:

“Nationalisation is not government

policy and the DfT does not have the

capabilities to take over the running of

a couple of dozen of train operators.”

The department is already running east

coast main line and Northern Rail

franchises. South Western Railway, the

Transpennine Express and the C2C in

south Essex could be next.

A spokesman said: “The ONS is

reviewing the classification of train op-

erating companies. We will announce

the outcome as soon as possible.”

Apple’s strong iPhone sales

bring third-quarter record

Callum Jones

Google reports sales fall

for first time in history

its profits comes from online advertis-

ing through Google’s search engine, its

YouTube video-sharing network and

other platforms. The company also has

interests in cloud computing, the

Android mobile operating system for

smartphones, its digital voice assistant

devices and self-driving cars.

Sundar Pichai, Alphabet’s chief exec-

utive, blamed the uncertain economic

environment caused by the coronavi-

rus pandemic and lockdown, but said

he was seeing early signs of advertising

stabilising. The tech giant reported a

total profit of $6.4 billion, down from

$9.1 billion a year earlier.

Google’s woes stood out from other

tech giants, including Facebook, which

brushed off fears of an advertising slow-

down last night, beating Wall Street

expectations for both revenue and user

growth. The world’s largest social

media company, which makes nearly

all its money from digital advertising,

posted revenue of $18.7 billion for its

second quarter, up 11 per cent from

$16.8 billion a year earlier.

However, this is a slowdown from the

average 25 per cent annual growth that

the company has posted over the last

four quarters. Profits rose 98 per cent to

$5.1 billion, from $2.6 billion in the same

quarter last year.

Facebook said that growth was likely

to remain muted going forward amid

the economic difficulties, as well as an

advertiser boycott by some larger

brands who believe the company

should do more to tackle hate speech.

However, Facebook continued to

grow the number of users taking to its

family of social media platforms, in-

cluding Instagram and Whatsapp, dur-

ing the pandemic despite fierce compe-

tition for screen time from entertain-

ment apps such as TikTok and Netflix.

The number of monthly active users

across all its apps in the three months to

the end of June rose 14 per cent to

3.14 billion, while Facebook users alone

grew 12 percent to 2.7 billion on the

same metric.

Tom Knowles

Technology Correspondent

Unexpectedly strong demand for

iPhones helped Apple defy gloomy

Wall Street expectations and post

record third-quarter results last night.

The technology company reported

revenue of $59.69 billion and profit of

$2.58 per share in the three months to

June 2 despite Covid-19 forcing it to

shut many of its stores worldwide. Ana-

lysts had forecast revenue of $52.1 bil-

lion and profit of $2.09 per share.

Shares in the business entered record

territory after its update, rising 5 per

cent in out-of-hours trading as Luca

Maestri, chief financial officer, hailed

its “ability to innovate and execute dur-

ing challenging times”.

Apple, based in Cupertino, Califor-

nia, is one of the world’s most valuable

companies with a market value of about

$1.66 trillion. It makes iPhones, iPad

tablets and Mac computers, provides

services such as Apple Music, the

iCloud storage library and its App Store

and also now offers a credit card.

It revealed yesterday that iPhone

revenues had risen to $26.42 billion

during the third quarter; $4 billion

ahead of the average analyst projec-

tion, which indicated they were on

course to fall to $22.37 billion.

$38.2bn

Alphabet revenue for second quarter