Amazon surprises the doubters with a profit - and shares leap 19 percent
Amazon has reported a surprise second-quarter profit with sales beating analysts’ estimates. Bloomberg's comment: "They're showing investors that they can make money when they put the brakes on investments."
Bezos: Reason to smile
Shares in Amazon jumped 19 per cent after reporting revenue up 20 per cent to $23.2 bn. Analysts average projection was $22.4bn.
For the June quarter, Amazon made a profit of $92m, up from a year-ago loss of $126m. Net income was 19 cents a share, the company said in a statement. The prediction had been a loss of 14 cents.
Chief Executive Officer Jeff Bezos, now owner of the Washington Post - not part of Amazon - is pushing the web retailer, which he founded two decades ago, beyond sales of books, electronics and household items as the business matures.
While Bezos has focused on pouring profits back into growing Amazon’s business, said Bloomberg, he has occasionally pulled back on spending to show that Amazon can be profitable. Operating expenses grew slower than sales, rising 17 per cent to $22.7bn, Seattle-based Amazon said.
“They are showing investors that if they want to deliver profits, they can,” said Michael Pachter, an analyst at Wedbush Securities. “Amazon is a dominant online retailer, well on its way to becoming one of the world’s largest retailers.”
Shares surged in extended trading. The stock declined 1.3 per cent to $482.18 at the close in New York, leaving it up 55 per cent this year.
Still, competition is growing. Wal-Mart is rolling out a new membership service to challenge Amazon Prime, which offers two-day shipping, TV shows, photo storage and other benefits for an annual fee.
Startup Jet.com Inc. officially debuted this week, following months of testing to give online deal-hunters an alternative to Amazon.
Amazon’s cloud-computing division, which offers Web data storage and computing services and includes customers such as Pinterest Inc. and Netflix Inc., had sales of $1.82 bn, up 81 per cent from a year earlier.
Amazon forecast third-quarter revenue of $23.3bn to $25.5bn, compared with analysts’ average projection of $23.9bn.
“We’ve had competition for 20 years now from some of the biggest names in retail and other areas,” Amazon chief financial officer Brian Olsavsky said on a call. “We’re used to competition, but we focus on the customer ... We’re happy with the results.”