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Amazon profit blows away analysts’ estimates

Amazon’s value crosses the 900 billion USD for the first time, Dortmund, Germany - 14 Nov 2017
Investors have placed tremendous faith in Amazon’s ability to find new customers and squeeze more money from existing customers by offering them new products and services.
(Friedemann Vogel / EPA/Shutterstock)

Amazon.com Inc. reported better-than-expected second-quarter earnings and forecast more of the same in the current period, igniting investor optimism about cloud computing, advertising and other businesses that are more profitable than its main online retail operation.

The world’s largest e-commerce company’s second-quarter profit came in at $2.5 billion, or $5.07 a share, more than double analysts’ forecasts, on net sales of $52.9 billion. Amazon said third-quarter operating income will surge to as much as $2.4 billion, compared with the average analyst estimate of $1.28 billion, according to data compiled by Bloomberg.

Amazon’s stock rose 3.3% in extended trading after falling $55.61, or 3%, to $1,808 in regular trading.

The results and outlook show Amazon is managing to keep a lid on expenses while investing heavily in new devices and businesses such as selling groceries and prescription drugs. The numbers also calmed Wall Street concerns after Facebook Inc.’s disappointing second-quarter report hammered its shares and dragged down other tech stocks.

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Amazon’s stock has more than tripled in the last three years, making founder and Chief Executive Jeff Bezos the richest person on the planet. It’s the world’s second-most-valuable public company now behind Apple Inc., making it one of the front-runners in the race to reach $1 trillion in market value.

Investors have placed tremendous faith in Amazon’s ability to find new customers and squeeze more money from existing customers by offering them new products and services. It bought online pharmacy PillPack last month, which followed its $13.7-billion acquisition of Whole Foods last year to jump-start its struggling grocery business. The cloud and ad businesses have helped because they’re both more profitable than the core e-commerce operations.

The momentum has been strong enough to sustain broadsides from President Trump, who has accused Amazon of freeloading off the U.S. Postal Service and using the Washington Post as a lobbying tool against antitrust criticisms. Bezos owns the Washington Post, which frequently publishes hard-hitting investigative pieces about Trump and his administration.

Revenue from Amazon Web Services, the company’s profitable cloud-computing division, jumped 49% to $6.1 billion. First-quarter growth, which Amazon reports without the effect of currency changes, was 48%.

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Sales from other businesses — mostly advertising — surged 129% to $2.2 billion, just below the first-quarter growth rate.


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