Amazon shares catch fire on surprise profit

By: 9 years ago

Amazon.com founder and CEO Jeff Bezos presents the company’s first smartphone, the Fire Phone, on June 18, 2014 in Seattle, Washington. AFP PHOTO

SAN FRANCISCO, United States—Amazon shares vaulted higher Thursday after the online giant’s second consecutive surprise profit, defying expectations for a loss.

Amazon posted net income of $79 million in the third quarter, against analyst expectations of more losses. That came after the $92 million the company scored in the second quarter

The profits came on a 23 percent year-on-year gain in total sales to $25.4 billion.

Amazon shares rallied 10.7 percent in after-hours trade to $624.50.

The profit news comes as Amazon faces pressure to deliver more value to shareholders despite founder Jeff Bezos’s strategy of investing in a vast array of projects—from online video and music to its own smartphones and delivery drones to business email.

The Seattle, Washington, company recently has been expanding its on-demand grocery delivery service and pushing its Fire tablet computers, having apparently thrown in the towel on its own mobile phones.

Amazon has not disclosed details on sales of its tablets, but Bezos said in the earnings statement that “Fire is the number one best-selling product on Amazon.com since launch, and based on the strength of the customer response, we are building millions more than we’d already planned.”

Moving in the opposite direction of Apple, Amazon has launched a new line of tablets starting as low as $50 for US customers.

Its online video has been seen as successful, winning Emmy awards for one of its programs this year and bringing in customers to its Prime subscription service.

Analysts at Consumer Intelligence Research Partners, estimate that Amazon Prime now has 47 million US members, spending on average about $1,200 per year.

Its dark comedy “Transparent” became the first series created by an Internet streaming service to win an Emmy in a major category, and took five awards in all.

Third-quarter net sales growth in North America was a solid 28.3 percent over a year ago, while growth internationally was relatively sluggish at 7.2 percent.

Amazon’s aggressive push in the rapidly growing but highly competitive cloud computing services sector delivered a 78.4 percent gain in net sales, with the business bringing in $2.1 billion in revenues.

Looking ahead, Amazon said it expects net sales in the fourth quarter to be between $33.50 billion and $36.75 billion up 14 to 25 percent from last year.