Amazon delivers big profits but shares dive

SAN FRANCISCO: US online giant Amazon on Thursday reported profits doubled in the past quarter, as it attracted more customers with video and other services, but the results missed Wall Street forecasts.

Amazon shares dived more than 13 percent to $551 in afterhours trade on the results, which showed a fourth-quarter profit of $482 million, up from a $214 million profit a year earlier. The results marked the third consecutive quarterly profit for the company, which is a heavyweight in online retail as well as cloud computing, and more recently streaming video. Overall revenue jumped 22 percent from a year ago to $35.7 billion. Amazon was one of the “clear winners” in the battle for consumers’ money during the yearend holiday season, according to Neil Saunders, chief of retail analysis firm Conlumino.

But while Amazon delivered “stellar topline performance” along with improving net income, its profitability “is still painfully weak,” Saunders said. “This is a conscious decision by a company that uses a large chunk of its revenues to invest back into generating future growth,” Saunders said. “Clearly this is a strategy that is working, and it is one that is accepted by the market.”

He gave the example of Amazon putting competitive pressure on traditional retail players such as Walmart. Investors looking for big profits may be put off by Amazon investing heavily to build its businesses, from data centers for cloud services and shows for its streaming television service to developing drones to quickly deliver online purchases. Amazon, which earned a reputation for making little or no profit as it gained market share, managed an annual profit for 2015 of $596 million. Revenues were up 20 percent for the year, at $107 billion.

‘Like day one’ “Twenty years ago I was driving the packages to the post office myself and hoping we might one day afford a forklift,” said chief executive Jeff Bezos, who founded the company in 1994.

“This year, we pass $100 billion in annual sales and serve 300 million customers. And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like day one.” Amazon has made Bezos into one of the world’s wealthiest individuals, with a fortune estimated at some $50 billion, and he has since created his own space company called Blue Origin and purchased The Washington Post newspaper. — AFP