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Alphabetannounced its first-ever dividend on Thursday and a $70 billion stock buyback, cheering investors who sent the stock surging nearly 16% after the bell.

The Google parent is returning capital while spending billions of dollars on data centers to catch up with rivals on generative artificial intelligence. The dividend will be 20 cents per share.

Just three months ago, Alphabet’s Big Tech rival, Meta Platforms, announced its own first-ever dividend, a move that lifted the social media company’s stock market value by $196 billion the following day. Amazon remains the lone holdout among Big Tech firms not offering a dividend.

Alphabet beat expectations for the quarter in sales, profit and advertising – metrics that are all closely watched.

“Alphabet’s announced dividend payouts and buybacks on top of the solid earnings beat are not only a breath of fresh air for the tech market as a whole, but also a very intelligent strategy for the search engine giant going into a tough time of the year,” said Thomas Monteiro, senior analyst at Investing.com.

Alphabet’s after-hours share surge of nearly 16% following the report increased its stock market value by about $300 billion to over $2 trillion.

In a call to discuss results, CEO Sundar Pichai touted Google’s AI offerings as a boon to its core search results. “We are encouraged that we are seeing an increase in search usage among people who are using the AI overviews,” he said.

Revenue was $80.54 billion for the quarter ended March 31, compared with estimates of $78.59 billion, according to LSEG data.

The search firm’s beat on first-quarter revenue was powered by rising demand for its cloud services on the back of increasing adoption of artificial intelligence and steady advertising spending.

Google reported advertising sales rose 13% in the quarter to $61.7 billion. That compares with the average estimate of $60.2 billion, according to LSEG data.

Alphabet is coming off a fourth quarter in which ad sales missed the mark, sending shares tumbling, amid rising competition from Amazon, Facebook and new entrants like TikTok. The latter faces an uncertain future after President Biden signed a bill that would ban the popular app if it is not sold within the next nine to 12 months.

Meanwhile, Google Cloud revenue grew 28% in the first quarter, boosted by a boom in generative AI tools that rely on cloud services to deliver the technology to customers.

Alphabet’s capital expenditures were $12 billion, a 91% rise from a year prior, a figure Gabelli Funds portfolio manager Hanna Howard called “higher than anticipated.”

Still, CFO Ruth Porat said on the call with analysts that she expects such expenditures to be at that level or higher throughout the remainder of the year, as the company spends to build artificial-intelligence offerings.

Despite the surge in capital expenditures, Porat said operating margin in 2024 would be higher than last year, without elaborating.

Google’s cloud services are attractive for venture capital-backed startups developing generative AI technologies due to their pricing and ease of integration with other tools, investors and experts have previously said.

Google has touted its AI-powered chatbot, Gemini, as a panacea for automation, from coding to document creation. The software was widely criticized, however, after it was found to generate historically inaccurate images, including of former US leaders and World War Two-era German soldiers.

Google has said it is aware of the issues and is working to address them.

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Politics

Government takes first step in appealing court ruling banning asylum seekers from Epping hotel

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Government takes first step in appealing court ruling banning asylum seekers from Epping hotel

The government has taken the first step in appealing a court’s decision that asylum seekers cannot be housed in an Essex hotel.

The Home Office is seeking permission to intervene in the case, which, if granted, will allow it to appeal the interim judgment handed down last week.

Epping Forest District Council sought an interim High Court injunction to stop migrants from being accommodated at The Bell Hotel in Epping, which is owned by Somani Hotels Limited.

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Councils vs migrant hotels: What next?

The interim injunction demanded the hotel be cleared of its occupants within 14 days.

In a ruling on Tuesday, Mr Justice Eyre granted the temporary block, but extended the time limit by which it must stop housing asylum seekers to 12 September.

Somani Hotels will now appeal against the court order blocking the use of the hotel as accommodation for asylum seekers, the company’s solicitors have said.

Meanwhile, security minister Dan Jarvis said on Friday that closing hotels housing asylum seekers must be done “in a managed and ordered way” as he unveiled government plans to challenge the High Court’s decision.

More on Asylum

He told broadcasters: “This government will close all asylum hotels and we will clear up the mess that we inherited from the previous government.

“We’ve made a commitment that we will close all of the asylum hotels by the end of this parliament, but we need to do that in a managed and ordered way.

“And that’s why we’ll appeal this decision.”

An analysis by Sky News has found 18 other councils are also actively pursuing or considering similar legal challenges to block asylum hotels – including Labour-run Tamworth and Wirral.

Disquiet with the use of asylum hotels is at a high after the latest statistics showed there were more than 32,000 asylum seekers currently staying in hotels, marking a rise of 8% during Labour’s first year in office.

The number of small boat crossings in the Channel is also up 38% on the previous 12 months.

Following the Epping case, a wave of protests is expected outside of asylum hotels across the country in the coming days.

Stand Up To Racism is preparing to hold counter-protests outside the asylum hotels on Friday, including in Bournemouth, Cardiff and Leeds, with further demonstrations expected on Saturday.

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‘We can’t take them’: Wirral residents on migration

In its case, Epping Forest District Council argued that the owners of the Bell Hotel did not have planning permission to use the premises to accommodate asylum seekers.

It argued that the injunction was needed amid “unprecedented levels of protest and disruption” in connection with the accommodation.

Shadow justice secretary Robert Jenrick said the people of Epping who protested and its council have “led the way”, writing in The Telegraph that “our country’s patience has snapped”.

His Conservative colleague Chris Philp, the shadow home secretary, said on Thursday that people have “every right” to protest over asylum hotels in their areas.

Kemi Badenoch, the Tory leader, has urged councils to explore legal challenges – with Conservative-run Broxbourne Council announcing that it would do so.

Read more:
A council-by-council breakdown of asylum seekers in hotels
Who says what on asylum hotels?
Labour smell dirty tricks over asylum hotel court ruling

Hillingdon Council, which is also controlled by the Tories, also said it was exploring its options.

Meanwhile, former Reform chairman Zia Yusuf told Sky News three councils run by his party had the power to mount legal challenges.

He said West Northamptonshire, which Reform seized control of in May’s local elections, would be doing so.

In a further headache for Sir Keir Starmer, Labour-controlled councils are also considering legal action, including Wirral and Tamworth.

Paula Basnett, the Labour leader of Wirral council, said: “We are actively considering all options available to us to ensure that any use of hotels or other premises in Wirral is lawful and does not ride roughshod over planning regulations or the wishes of our communities.”

Carol Dean, the Labour leader of Tamworth Borough Council, said she understood the “strong feelings” of residents about the use of a local hotel to house asylum seekers, and added: “We are closely monitoring developments and reviewing our legal position”.

Labour-controlled Stevenage council added: “The council takes breaches of planning control seriously and we’re actively investigating alleged breaches relating to the operation of hotels in Stevenage.”

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UK

Government takes first step in appealing court ruling banning asylum seekers from Epping hotel

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Government takes first step in appealing court ruling banning asylum seekers from Epping hotel

The government has taken the first step in appealing a court’s decision that asylum seekers cannot be housed in an Essex hotel.

The Home Office is seeking permission to intervene in the case, which, if granted, will allow it to appeal the interim judgment handed down last week.

Epping Forest District Council sought an interim High Court injunction to stop migrants from being accommodated at The Bell Hotel in Epping, which is owned by Somani Hotels Limited.

Please use Chrome browser for a more accessible video player

Councils vs migrant hotels: What next?

The interim injunction demanded the hotel be cleared of its occupants within 14 days.

In a ruling on Tuesday, Mr Justice Eyre granted the temporary block, but extended the time limit by which it must stop housing asylum seekers to 12 September.

Somani Hotels will now appeal against the court order blocking the use of the hotel as accommodation for asylum seekers, the company’s solicitors have said.

Meanwhile, security minister Dan Jarvis said on Friday that closing hotels housing asylum seekers must be done “in a managed and ordered way” as he unveiled government plans to challenge the High Court’s decision.

More on Asylum

He told broadcasters: “This government will close all asylum hotels and we will clear up the mess that we inherited from the previous government.

“We’ve made a commitment that we will close all of the asylum hotels by the end of this parliament, but we need to do that in a managed and ordered way.

“And that’s why we’ll appeal this decision.”

An analysis by Sky News has found 18 other councils are also actively pursuing or considering similar legal challenges to block asylum hotels – including Labour-run Tamworth and Wirral.

Disquiet with the use of asylum hotels is at a high after the latest statistics showed there were more than 32,000 asylum seekers currently staying in hotels, marking a rise of 8% during Labour’s first year in office.

The number of small boat crossings in the Channel is also up 38% on the previous 12 months.

Following the Epping case, a wave of protests is expected outside of asylum hotels across the country in the coming days.

Stand Up To Racism is preparing to hold counter-protests outside the asylum hotels on Friday, including in Bournemouth, Cardiff and Leeds, with further demonstrations expected on Saturday.

Please use Chrome browser for a more accessible video player

‘We can’t take them’: Wirral residents on migration

In its case, Epping Forest District Council argued that the owners of the Bell Hotel did not have planning permission to use the premises to accommodate asylum seekers.

It argued that the injunction was needed amid “unprecedented levels of protest and disruption” in connection with the accommodation.

Shadow justice secretary Robert Jenrick said the people of Epping who protested and its council have “led the way”, writing in The Telegraph that “our country’s patience has snapped”.

His Conservative colleague Chris Philp, the shadow home secretary, said on Thursday that people have “every right” to protest over asylum hotels in their areas.

Kemi Badenoch, the Tory leader, has urged councils to explore legal challenges – with Conservative-run Broxbourne Council announcing that it would do so.

Read more:
A council-by-council breakdown of asylum seekers in hotels
Who says what on asylum hotels?
Labour smell dirty tricks over asylum hotel court ruling

Hillingdon Council, which is also controlled by the Tories, also said it was exploring its options.

Meanwhile, former Reform chairman Zia Yusuf told Sky News three councils run by his party had the power to mount legal challenges.

He said West Northamptonshire, which Reform seized control of in May’s local elections, would be doing so.

In a further headache for Sir Keir Starmer, Labour-controlled councils are also considering legal action, including Wirral and Tamworth.

Paula Basnett, the Labour leader of Wirral council, said: “We are actively considering all options available to us to ensure that any use of hotels or other premises in Wirral is lawful and does not ride roughshod over planning regulations or the wishes of our communities.”

Carol Dean, the Labour leader of Tamworth Borough Council, said she understood the “strong feelings” of residents about the use of a local hotel to house asylum seekers, and added: “We are closely monitoring developments and reviewing our legal position”.

Labour-controlled Stevenage council added: “The council takes breaches of planning control seriously and we’re actively investigating alleged breaches relating to the operation of hotels in Stevenage.”

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Technology

Kimbal Musk on Elon’s Tesla pay package: ‘My brother deserves to be paid’

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Kimbal Musk on Elon's Tesla pay package: 'My brother deserves to be paid'

FILE PHOTO: Kimbal Musk speaks onstage at Move Over NFTs. Here Come the DAOs during the 2022 SXSW Conference and Festivals at Austin Convention Center on March 14, 2022 in Austin, Texas.

Chris Saucedo | Getty Images

Kimbal Musk, the younger brother of the world’s wealthiest person, said Elon Musk “deserves to be paid,” as Tesla remains locked in a legal saga over its CEO’s pay package.

“I think my brother deserves to be paid,” Kimbal Musk said on CNBC’s “Squawk Box” on Friday. “He has zero pay for the past six to eight years. I don’t think that’s right. I’ll let Tesla shareholders make that decision, but I believe that it does need to be. He needs to be paid.”

Elon Musk isn’t paid a salary or any cash bonuses at Tesla. He is compensated through “performance awards” of valuable stock options that are granted based on Tesla hitting certain milestones.

Earlier this month, Tesla granted Elon Musk an “interim” pay package of 96 million shares, which would be worth about $29 billion. The package includes shares that vest in two years as long as he continues as CEO or in another key executive position.

The pay plan was approved by a “special committee” of the Tesla board, with Elon Musk and Kimbal Musk recusing themselves, board members Robyn Denholm and Kathleen Wilson-Thompson said in an Aug. 4 letter to shareholders.

The award came after a Delaware judge in December ordered Tesla to revoke Elon Musk’s $56 billion pay package from 2018, which was the largest compensation plan in U.S. history for a public company executive.

Read more CNBC tech news

Before the Delaware ruling on his 2018 pay plan, in January 2024, Musk said he wanted even more pay and control of Tesla in a post on X, which was formerly known as Twitter.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” Musk wrote at the time. “Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.”

He was already building products outside of Tesla, including at his newest artificial intelligence venture, xAI, which was formed in Nevada in March 2023.

The new pay package was granted to Musk without a shareholder vote, and will only apply if Musk and Tesla lose on appeal in Delaware.

An investment group that works with pension funds, the SOC Investment Group, sent a letter this week to Nasdaq asking them to investigate Tesla, saying its board should have attained shareholder approval for the new package under Nasdaq listing policies.

Denholm and Wilson-Thompson wrote in the letter that the special committee is working to “address a longer-term CEO compensation strategy,” which it plans to put to a shareholder vote at Tesla’s upcoming annual meeting in November.

— CNBC’s Lora Kolodny contributed to this report.

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