AMAZON SALES SURGE BUT PROFIT PLUNGES

Profit, however, plunges as investments, depreciation of equipment, share buys and other expenses eat into revenue

SAN FRANCISCO

INTERNET colossus Amazon.com Inc on Thursday reported its profit shrank in the recently ended quarter despite surging sales as it poured money into growth.

The United States-based company said net sales increased 25 per cent to US$38 billion (RM162.2 billion) when compared with the same period last year, but profit plunged 77 per cent from a year ago to US$197 million.

Investments, depreciation of equipment, share buys and other expenses ate into revenue in a familiar pattern of Amazon putting long-term growth ahead of short-term profit.

“Our teams remain headsdown and focused on customers,” said Amazon founder and chief executive Jeff Bezos.

“It’s energising to invent on behalf of customers, and we continue to see many high-quality opportunities to invest.”

Amazon has been expanding from its original mission as an online retailer to a diversified tech firm in cloud computing, online video, computer hardware and artificial intelligence.

The company recently announced plans to buy US grocer Whole Foods, which could help it expand in the sector.

Amazon shares slipped some three per cent to US$1,012.15 in after-market trades that followed the release of the earnings figures that fell short of Wall Street’s expectations.

The report comes as Bezos briefly dethroned Microsoft founder Bill Gates as the world’s richest person, according to an estimate by Forbes magazine.

An early jump in Amazon shares gave Bezos a net worth of US$90.5 billion, half a billion ahead of Gates, but by the end of the trading day Bezos was back in the No. 2 spot. AFP