Amazon reports thin profits on strong sales
Source: Alistair Barr and Anna Prior
An Amazon Fresh truck arrives at a warehouse on June 27, 2013 in Inglewood, California.
Amazon.com Inc. reported another quarter of skimpy profits as the Web-commerce giant spent heavily on shipping, cloud computing and newer initiatives that it hopes will keep revenue growing quickly.
Amazon AMZN -0.47% reported net income of $108 million, or 23 cents a share, compared with $82 million, or 18 cents a share, a year earlier. Analysts were expecting a per-share profit of 23 cents, according to Thomson Reuters.
Sales increased 23% to $19.74 billion. Amazon in January had estimated sales would range between $18.2 billion and $19.9 billion. Analysts were expecting $19.43 billion.
Amazon is spending heavily on its network of shipping warehouses, its cloud-computing offering Amazon Web Services and new hardware such as the Fire TV set top box. That sucks up a lot of the company’s revenue each quarter, leaving slim earnings. However, if analysts and investors see signs of growth from this spending, they usually give Amazon the benefit of the doubt.
In March, Amazon increased the cost of its Prime unlimited shipping and video service by 25% to $99 a year in the U.S. The company’s shares were hit hard when it first proposed the change earlier in 2014. The stock is down more than 15% so far this year, while rival eBay Inc.’s shares are roughly unchanged.
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