Amazon shares slide despite another billion-dollar profit
AMAZON reported has another record quarterly profit, fuelled by the growth of online shopping and its cloud-computing service. But its revenue grew less than Wall Street analysts expected, and Amazon’s shares fell after the results were released.
The company, based in Seattle, has boosted its profitability as it expanded far beyond online shopping.
For years, the company posted razor-thin quarterly profits, spending most of what it earned on building warehouses and making other investments. But that’s changed as its Ama- zon Web Services unit, which provides cloud computing services to companies and government agencies, has become a major money maker for Amazon.
Amazon posted third-quarter profit of $2.88 billion, its fourth straight quarter of profits above $1 billion. A year ago, it reported profit of just $256 million.
On a per-share basis, it reported earnings of $5.75, beating the $3.29 per share analyst expected, according to Zacks Investment Research.
Revenue rose 29 per cent to $56.58 billion, but that was below the $57.05 billion analysts expected.
Shares in Amazon.com Inc., which are up 50 per cent so far this year, fell 7 per cent to $1655.98 in extended trading on Thursday.
At Amazon Web Services, revenue jumped 46 per cent to $6.7 billion. In its “other” category, which is mostly made up of its growing advertising business, revenue more than doubled to $2.5 billion.
But Amazon faces higher costs as it boosts pay for all its US workers to at least $15 an hour from next month.
Amazon’s chief financial officer, Brian Olsavsky, said the company is “expecting a strong holiday season”.
However, its revenue forecast of $66.5 billion to $72.5 billion for the fourth quarter, which includes the holiday shopping season, was below the $73.87 billion analysts expected.
Rivals are hoping to steal some sales from Amazon by mimicking its fast delivery.
Target, for the first time, will be offering free two-day shipping with no minimum purchase this holiday season.