Second Quarter: Cloud Shines on Amazon

In the quarter ended June 3, net sales at Amazon rose 31.1%, to $30.4 billion, and net income jumped 831.6%, to $857 million, or $1.78 a share. This was the third consecutive quarter in which Amazon, which long has earned little money, has shown a record profit, and its fifth quarter in a row with a profit. The results were above analysts' estimates of net sales of $29.55 billion and earnings per share of $1.11, according to Thomson Reuters. As a result, the company's stratospheric stock price rose another 1.5%, to $764 a share, in after-market trading last night and this morning.

"They're starting to really prove out their profitability," Mark Mahaney, an RBC Capital Markets analyst told the New York Times.

Much of the higher profit is attributable to Amazon Web Services, the company's cloud services, whose operating income rose to $718 million on sales of $2.9 billion. By comparison, North American retail operations had similar operating income of $702 million, but on much larger sales of $17.7 billion. (International's sales grew 30.1%, to $9.8 billion, but had a net loss of $135 million.)

Still, retail sales in North America continued to grow, up 28.1% in North America, attributable in part to the popularity of Amazon Prime and ever-increasing consumer shopping online. As the Wall Street Journal observed, "In retailing, Amazon's power is spilling over the confines of the online world. The company overtook Wal-Mart Stores Inc. by market value a year ago and is pushing into brick-and-mortar outlets with a bookstore in its hometown of Seattle and several others planned across the U.S. The retailer is a major focal point for brands and manufacturers betting that consumers are willing to buy more staples online."

Amazon predicted that in the third quarter, net sales will be between $31 billion and $33.5 billion, up 22%-32% compared with the same period in 2015.

Powered by: Xtenit