Amazon profits steady after digesting Whole Foods
SAN FRANCISCO: Amazon said profits held steady in the third quarter as the online giant boosted revenue from its acquisition of grocery chain Whole Foods and expansion of its computing hardware line-up.
Profit for the quarter was US$256 million, up slightly from US$252 million a year ago while revenue jumped 34 per cent to US$43.7 billion for the company which has grown from its online retail roots to cloud computing, streaming video, artificial intelligence and more.
Amazon shares rallied 7.8 per cent to US$1,049 in after hours trade on the stronger-than-expected results.
In its earnings statement, Amazon founder and chief executive Jeff Bezos focused on Amazon’s fast-growing digital assistant Alexa, included in its connected speakers and third-party products ranging from appliances to automobiles.
“In the last month alone, we’ve launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more,” Bezos said.
“Customers have purchased tens of millions of Alexa-enabled devices... With thousands of developers and hardware makers building new Alexa skills and devices, the Alexa experience will continue to get even better.”
Amazon said Whole Foods, the natural foods chain acquired this year, provided US$1.3 billion in revenue and US$21 million in operating income for the company.
Excluding the impact of Whole Foods, net sales were up 29 per cent, Amazon said.
Its cloud computing arm Amazon Web Services accounted for US$4.6 billion in revenue and US$1.2 billion in operating income.
Amazon’s expansion into new sectors and markets has lifted the company’s share price and made Bezos one of the world’s richest individuals – briefly the richest at one point, according to one survey.
Along with its growing influence, Amazon has become one of the most valuable companies on the planet alongside US tech rivals Apple, Facebook and Google parent Alphabet.
Amazon said that for the fourth quarter, it expects revenues in a range of US$56 to US$60.5 billion, representing growth of 28 to 38 per cent compared with last year.
Neil Saunders of the research firm GlobalData called the Amazon results “stellar,” noting that Amazon has been able to drive growth from online sales with its Prime subscription service, which offers free delivery, video and other extras.
“Overall, Amazon is in very good shape,” Saunders said in a research note.
“In some ways, the deterioration in profit doesn’t matter, if only because the business has an enormous amount to show for its expenditure. These investments – in services, devices, new ventures, pricing, international markets, and business services – will all power growth in the years ahead.” — AFP