News

By Sheila Dang and Eva Mathews

(Reuters) -Google parent Alphabet Inc’s disappointing ad sales sparked worries across the digital media sector on Tuesday as advertisers cut back on their spending in the face of an economic slowdown.

Alphabet called out slowing spending by advertisers on YouTube, said financial services spending was cooling on Google, and plans to cut hiring by more than half.

The negative results shattered many expectations that Google, which is the world’s largest digital advertising platform by market share, would remain strong in a weakening economy and reinforced worries on Wall Street that inflation will continue to hurt advertising spending. Last week, smaller rival Snap Inc’s slowest-ever revenue growth rate sent inflation fears through tech sector and temporarily wiped out $40 billion in market capitalization.

Shares in Alphabet fell 6.5% in trading after the bell.

Alphabet’s weak results raises concerns for other companies in the sector, especially advertising-dependent Meta Platforms. The Facebook parent, which reports results on Wednesday, saw shares drop 4.5% on Tuesday.

Ruth Porat, Alphabet’s chief financial officer, said the deceleration in overall advertising revenue was due to last quarter’s “very strong performance,” adding that lower ad sales on YouTube were due to some advertisers pulling back on their ad spending.

Companies that slowed ad spending included those in financial services such as insurance, mortgages and cryptocurrencies, Alphabet said. Travel and retail advertisers helped Google Search ad revenue.

Google’s advertising revenue was $54.48 billion in the third quarter, compared with $53.13 billion last year but came in below analysts’ expectations.

The company said total revenue was $69.09 billion in the quarter ended Sept. 30, compared with $65.12 billion a year earlier.

Analysts on average expected revenue to be $70.58 billion, according to Refinitiv data.

“Google’s earnings miss this quarter proves it’s not immune to the challenges facing the digital advertising industry at large,” said Jesse Cohen, senior analyst at Investing.com.

The speed of the slowdown also shocked investors who are “highly sensitive to the changing tide,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

Ad sales on streaming video site YouTube also declined to $7.07 billion, from $7.2 billion in the prior-year quarter.

Alphabet’s net income fell to $13.91 billion, or $1.06 per share, from $18.94 billion, or $1.40 per share, a year earlier. Net income missed analyst expectations of $1.25 per share.

The company’s operating margin declined to 25% in the third quarter, from 32% in the prior year.

The tech giant said in July it would slow the pace of hiring for the rest of the year, saying it was “not immune to economic headwinds.” Porat said the company hired 12,700 people in the third quarter and expects to hire less than half that number in the final quarter.

Revenue from Google Cloud rose to $6.9 billion during the quarter, from $5 billion a year earlier.

During a conference call with analysts, Alphabet Chief Executive Sundar Pichai said the company would continue to evaluate its projects and make “course corrections” as needed. “Times like this are clarifying,” he said.

(Reporting by Eva Mathews in Bengaluru and Sheila Dang in Dallas; Editing by Anil D’Silva and Lisa Shumaker)

LONDON (Reuters) – British Prime Minister Rishi Sunak is now ready to face the hard work of government after appointing his senior ministerial team on Tuesday, a source in his office said, adding the new cabinet would ensure unity and stability through uncertain times.

Sunak, who replaced Liz Truss as leader after her brief stint as prime minister ended in chaos, chose to not bring in a new finance or foreign minister but did appoint a mix of allies and former adversaries to senior positions.

As Britain’s third prime minister this year, Sunak faces a daunting list of problems, including how to tackle an economic crisis and how to unite and rebuild a fractured party whose reputation has been shredded by months of scandals and rows.

“The hard work begins now and together, the Prime Minister’s new cabinet will deliver for the British people,” a source in his Number 10 Downing Street said in a statement.

“This cabinet brings the talents of the party together,” the source said. “It reflects a unified party and a cabinet with significant experience, ensuring that at this uncertain time there is continuity at the heart of government.”

Sunak will for the first time face the opposition Labour Party Leader Keir Starmer at 1100 GMT on Wednesday for ‘Prime Ministers’ Questions’ – the weekly showpiece political debate in parliament.

While Sunak’s decision to keep finance minister Jeremy Hunt in place is expected to keep financial market worries at bay until a fiscal statement expected on Oct. 31, his re-appointment of Suella Braverman as interior minister immediately drew criticism.

Last week Truss sacked Braverman over a security breach, but Sunak reappointed her to the role. Opponents accused Sunak of cutting a deal with Braverman to give her the job in exchange for her support in his leadership bid.

(Reporting by William James, Editing by William Maclean)

(Reuters) – Apple Inc said on Tuesday issues that had caused a brief outage in its iMessage service and video calling app FaceTime were resolved.

Users had earlier complained of not being able to send and receive text messages on iMessage and some reported problems with placing FaceTime calls.

More than 2,000 users reported issues with sending messages on the app, according to outage tracking website Downdetector.

Downdetector tracks outages by collating status reports from several sources including user-submitted errors on its platform. The outage may be affecting a larger number of users.

Earlier on Tuesday, Meta Platforms Inc’s WhatsApp faced a global outage, which was later resolved.

#imessagedown was trending on Twitter with over 30,000 tweets and several users posting memes about the outage.

(Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli)

(Reuters) – Xerox Holdings Inc’s shares plunged about 25% to 13-year lows on Tuesday after the photocopy maker slashed its annual revenue and cash flow forecasts, blaming a stronger dollar and a slower-than-expected recovery in global supply chains.

The hybrid work environment has amplified the pressures on the company already struggling with firms and consumers switching to digital documents to save money and help the environment.

Xerox on Tuesday lowered its 2022 revenue forecast to between $7 billion and $7.1 billion, compared to its previous forecast of at least $7.1 billion, reflecting a weaker euro and British pound.

The company, whose largest shareholder is activist investor Carl Icahn, cut its annual free cash flow (FCF) forecast to at least $125 million from about $400 million.

The reduction is partly due to persistently high inflation and slower-than-expected supply chain improvements, Xerox said.

“The global macroeconomic outlook has become increasingly somber over the past 3 months,” Chief Executive Steven Bandrowczak said in a call with analysts.

Finance chief Xavier Heiss, however, said he expects quarter-on-quarter improvement in margin on FCF due to price increases to counter higher costs and better supply.

Shares clawed back some lost ground and were down 18% at $13.08 in afternoon trading.

Third-quarter revenue of $1.75 billion fell short of analysts’ estimate of $1.77 billion, according to Refinitiv data.

Adjusted profit fell to 19 cents per share from 48 cents per share, a year earlier.

(Reporting by Akash Sriram and Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila)

By David Shepardson

ELLABELL, Ga. (Reuters) – Hyundai Motor Co broke ground on a $5.54 billion electric vehicle (EV) and battery plant in the United States on Tuesday, as South Korea’s biggest automaker grapples with an uncertain outlook for its EV sales in its top market.

The investment is the largest in the state’s history and the latest in a string of EV and battery announcements in Georgia.

Hyundai plans to begin commercial production in the first half of 2025 in the massive plant in Bryan county about 30 miles west of Savannah, that will have an annual capacity of 300,000 units.

Georgia Governor Brian Kemp, a Republican, and the state’s two U.S. senators, Jon Ossoff and Raphael Warnock, both Democrats, attended the event and all praised the investment that will eventually add 8,100 jobs. Kemp and Warnock are up for re-election next month.

Kemp said since 2020 Georgia has announced 30 electric mobility-related projects that will ultimately result in $13 billion in investment and nearly 19,000 jobs. In December, EV maker Rivian Automotive Inc announced it would invest $5 billion in the state.

The groundbreaking comes amid anger from Korea and the European Union over U.S. tax policy on electric vehicles.

The Inflation Reduction Act signed by President Joe Biden in August requires EVs to be assembled in North America in order to qualify for U.S. tax credits. Hyundai and its affiliate Kia Corp as well as major European automakers were excluded from the EV subsidies as they do not yet make the vehicles there.

Korea’s ambassador to the United States, Taeyong Cho, told reporters there were ongoing discussions about the tax issue between the Biden administration and Korean government. He said it was unclear if the law would need to be changed by the U.S. Congress or if it could be addressed through the regulatory process.

The law made about 70% of EVs immediately ineligible for the tax credits of up to $7,500 per vehicle.

Sales of the Hyundai Ioniq 5 crossover SUV in the United States slumped around 14% in September from the previous month, hit by the new U.S. law.

Concern over Hyundai’s U.S. EV sales under the new regulations was cited by analysts when the company announced quarterly results on Monday.

Biden offered assurance in a letter to South Korean President Yoon Suk-yeol, who had asked the U.S. president last month for help to allay Seoul’s concerns that the new U.S. rules would hurt South Korea’s automakers.

As a result of the August law, only about 20 EVs qualify for subsidies under the new rules, among them models from Ford Motor Co and BMW.

(Reporting by David Shepardson in Ellabell, Ga.; Editing by Muralikumar Anantharaman and Matthew Lewis)

LONDON (Reuters) – British lawmaker Dominic Raab was appointed deputy prime minister and minister of justice on Tuesday, returning to the roles he held for a year until September.

Here are five facts about Raab:

– Raab, 48, lost his roles as deputy prime minister and justice minister when Liz Truss entered Downing Street earlier this year and has been a staunch supporter of now Prime Minister Rishi Sunak in two leadership campaigns.

– As deputy prime minister under Boris Johnson, Raab had to step in when the former leader was hospitalised in intensive care with COVID-19 in April 2020. He also served as foreign minister.

– Raab is a hardline eurosceptic, who long campaigned for Britain to leave the European Union and was appointed to Brexit minister in 2018 by another former prime minister, Theresa May.

– Raab ran against Johnson to become leader of the Conservative Party and prime minister in 2019. During that campaign he criticised Johnson’s “bluff and bluster” over Brexit. Raab was eliminated midway through the contest and then endorsed Johnson.

– The son of a Czech-born Jewish refugee who fled the Nazis in 1938, Raab was brought up in the southern English region of Buckinghamshire and studied law at Oxford University before becoming a lawyer working on project finance, international litigation and competition law.

(Reporting by Elizabeth Piper; Editing by Alistair Smout and Deepa Babington)

By Hyunjoo Jin and Mrinmay Dey

-Tesla Inc on Sunday announced lower-than-expected electric vehicle deliveries in the third quarter, as logistical challenges overshadowed its record deliveries.

The top electric car maker said “it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost,” but some analysts were also concerned about demand for high-ticket items due to the weakening global economy.

“The economy around the edges is still having a negative impact for Tesla that’s mostly logistical. But that I think there is some demand (issues) sprinkled in there,” Wedbush Securities analyst Dan Ives told Reuters after the delivery results.

“There is a dark cloud over the auto sector. And Tesla is not immune.”

Ford Motor said last month inflation-related costs would be $1 billion more than expected in the third quarter and that parts shortages had delayed deliveries.

Apple Inc. is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, Bloomberg reported last month, citing people familiar with the matter.

“I think that EVs are in for probably a little bit of a rough patch, just because people are probably going to be a little bit hesitant and less urgent to buy something new,” OANDA senior market analyst Ed Moya said.

‘CRAZY WAVE OF DELIVERIES’

Tesla delivered 343,830 electric vehicles, a record for the world’s most valuable automaker, but less than the 359,162 analysts on average had expected, according to Refinitiv. A year earlier Tesla delivered 241,300 units.

The latest deliveries fell short of Tesla’s production of 365,923 vehicles, which is rare for the automaker which has seen its deliveries higher or similar to production in many of recent quarters.

“As our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks,” Tesla said in a statement on Sunday.

Tesla CEO Elon Musk said on Sunday “Smoothing out crazy end of quarter delivery wave to reduce expedite costs & relieve stress on Tesla team.”

Last year, he said Tesla is having a “crazy wave” of deliveries at the end of each quarter, because its Shanghai factory makes cars for exports to Europe and other countries in the first half of a quarter and then cars to be sold in China.

Tesla again asked employees to help deliver “a very high volume of vehicles to eagerly waiting customers during the final days of Q3” in California, according to an email seen by Reuters.

Tesla on Sunday said it has “began transitioning to a more even regional mix of vehicle builds each week, which led to an increase in cars in transit at the end of the quarter.”

Q4 DELIVERY PUSH

Tesla set an ambitious target to produce almost 495,000 Model Y and Model 3s in the fourth quarter of this year, internal plans reviewed by Reuters show.

The company’s production ambitions come against the backdrop of increasingly gloomy outlook for global growth, with Musk himself telling top managers in June he had a “super bad feeling” about the economy and planned to cut staff.

During a conference call in July, Musk said at first that macroeconomic uncertainty might have some impact on demand for its electric vehicles, but when pressed for details by an analyst, he said the company did not have a demand problem but a production problem.

The automaker expanded production capacity in Shanghai after a resurgence in COVID-19 cases forced a suspension at the plant and fueled the first dip in deliveries after a nearly two-year-long record run.

In September, Tesla’s vehicle order backlog fell, especially in China, Troy Teslike, a Tesla data tracker tweeted.

Tesla said it delivered 325,158 Model 3 compact cars and Model Y sport-utility vehicle, as well as 18,672 of its Model S and Model X premium vehicles to customers during the quarter. Meanwhile, Musk on Friday showed off a prototype of its humanoid robot ‘Optimus,’ predicting the electric vehicle maker would be able to produce millions and sell them for under $20,000 – less than a third of the price of a Model Y.

Experts were impressed by the speed of development of Tesla’s humanoid robots, but they agreed with Musk, who said “there’s still a lot of work to be done to refine Optimus and prove it.”

(Reporting by Hyunjoo Jin in San Francisco, Savyata Mishra and Mrinmay Dey in Bengaluru, Victoria Waldersee in Berlin; Editing by Sriraj Kalluvila, Lisa Shumaker and Sandra Maler)

By Michael Church

HONG KONG (Reuters) – Rights group Open Stadiums have called on FIFA to throw Iran out of the World Cup finals in Qatar in November because of the country’s treatment of women.

In a letter sent to FIFA President Gianni Infantino on Thursday, the organisation said Iranian authorities continued to refuse to allow female fans access to games inside the country despite pressure from the game’s governing body.

“The Iranian FA is not only an accomplice of the crimes of the regime. It is a direct threat to the security of female fans in Iran and wherever our national team plays in the world. Football should be a safe space for us all,” the letter said.

“That is why, as Iranian football fans, it is with an extremely heavy heart that we have to raise our deepest concern about Iran’s participation in the upcoming FIFA World Cup.

“Why would FIFA give the Iranian state and its representatives a global stage, while it not only refuses to respect basic human rights and dignities, but is currently torturing and killing its own people?

“Where are the principles of FIFA’s statues in this regard?

“Therefore, we ask FIFA, based on Articles 3 and 4 of its statutes, to immediately expel Iran from the World Cup 2022 in Qatar.”

The articles cited cover the issues of human rights and non-discrimination based on gender, race, religion and other matters, with breaches punishable by suspension or expulsion from the global body.

Neither FIFA nor Iran’s FA immediately responded to a Reuters request for comment.

The call comes as protests continued in several cities across Iran on Thursday against the death of young woman in police custody, state and social media reported, as a human rights group said at least 83 people had been killed in nearly two weeks of demonstrations.

Iran President Ebrahim Raisi has described the unrest as the latest in a series of moves against Iran by hostile Western powers since the 1979 Islamic revolution.

Open Stadiums have campaigned over the last decade for women to be allowed to attend football matches in Iran, but with only limited success.

Under pressure from Infantino, a small group of female fans were granted access to Persepolis’s home leg of the 2018 Asian Champions League final in Tehran.

But there has been minimal progress since, with female fans barred from entering Iran’s World Cup qualifying game against Lebanon in Mashad in March, with video emerging of female supporters being pepper sprayed outside the stadium.

The Carlos Queiroz-coached national team played friendly matches during the recent international break against Uruguay and Senegal in Austria, with both games played behind closed doors over security concerns.

Iran are due to appear at their sixth World Cup finals and have been drawn to face England, Wales and the United States in Qatar.

(Reporting by Michael Church in Hong Kong, Editing by Peter Rutherford)

(Reuters) -Apple Inc is dropping plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize, Bloomberg News reported on Tuesday, citing people familiar with the matter.

The company told suppliers to curtail efforts to increase assembly of its flagship iPhone 14 product family by as many as 6 million units in the second half of this year, Bloomberg reported.

Instead, the Cupertino, California-headquartered company will aim to produce 90 million handsets for the period, nearly the same number as a year ago and in line with Apple’s original forecast this summer, the report said.

Apple did not immediately respond to a Reuters request for comment.

Demand for the higher-priced iPhone 14 Pro models is stronger than for the entry-level versions and at least one Apple supplier is shifting production capacity from lower-priced iPhones to premium models, Bloomberg reported.

Apple had this week said it would start manufacturing the iPhone 14, launched earlier this month, in India, as the tech giant moves some of its production away from China.

(Reporting by Jahnavi Nidumolu and Juby Babu in Bengaluru; Editing by Rashmi Aich and Savio D’Souza)