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Thursday, April 26, 2018
Amazon Reports Huge Profits


Amazon.com contimues its succesfull moves in retail and cloud computing, as the company reported a surge in first-quarter sales and profit.

The world's largest online retailer said net income rose to $1.6 billion, or $3.27 per share in the quarter ended March 31. Sales rose 43 percent to $51.0 billion in the quarter.

The strong consumer adoption of Prime, Amazon's loyalty club that includes fast shipping, video streaming and other benefits, has been key to the jump in revenue. In the Q1, sales from Prime fees and other subscriptions grew 60 percent to $3.1 billion.

The e-commerce giant will also start charging $20 more for its Prime membership program. The new price, $119, will go into effect May 11 for new subscribers, CFO Brian Olsavsky announced Thursday. Existing members will be charged the higher price beginning June 16 as their accounts become eligible for renewal.

"The value of Prime to customers has never been greater," Olsavsky told investors. "And the cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs."

Amazon Web Services (AWS), which handles data and computing for large enterprises in the cloud, saw its profit jump from the previous quarter, too. It posted a 49 percent rise in sales to $5.44 billion.

Amazon is also expanding business of selling space on its site, a move that could eventually be as a step towards taking advertising dollars from Google and Facebook.

With $2 billion or less of advertising revenue, Amazon is dwarfed by Google and Facebook, but it is growing fast, may be outselling ads on Twitter and Snapchat, and it has advantages that other contenders lack.

The company has the advantage to know exactly what consumers need, since the company has users' purchase data. That's more direct than knowing what people are searching for (Google) or what you want your friends to think you like (Facebook).

Amazon does not break out ad sales alone. It says advertising sales are the majority of its "other" section, which hit $2.0 billion in the first quarter.

Overall, Amazon said it expects operating profit this quarter between $1.1 billion and $1.9 billion, up from $628 million a year earlier.

The company is capable of delivering virtually any product to customers at a low cost, and at times faster than it takes to buy goods from a physical store. It acquired Whole Foods Market for $13.7 billion last year to help it send groceries to shoppers' doorsteps.

Amazon traditionally operates on a low profit margin and invests in a wide array of areas. The company plans to spend more on video content this year, including its renewed deal to stream Thursday Night Football games and a prequel television series to "The Lord of the Rings" in the works.

Earlier this year, Amazon announced a partnership with JPMorgan Chase & Co and Berkshire Hathaway Inc to determine how to cut health costs for hundreds of thousands of their employees.

Separately, the company and the U.S. National Football League announced a deal to stream Thursday night games during the 2018 and 2019 seasons on Amazon's Prime Video.



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Nintendo Partners with Cygames to Boost Smartphone Gaming        All News        Intel Reports Record First-quarter Revenue on Demand for Data Center Chips, 10nm Chips Coming in 2019
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