By Greg Bensinger
Amazon.com Inc. surprised investors by reporting an unexpected
profit along with its sharp sales gains.
The Seattle online retailer reported a surprising profit of $92
million, up from a year-ago loss of $126 million. Sales rose a
better-than-expected 20% to $23.18 billion.
Shares of Amazon jumped 17% to $565 in after-hours trading.
While Amazon's sales growth has kept investors happy--the stock
is up more than 50% this year--it has slowed in recent quarters. In
the past two years, Amazon was routinely turning revenue gains of
20% or more, but that dipped to about 15% late last year and in
this year's first three months.
The bottom-line losses reflect Amazon's continued investment in
business and services it thinks will yield more sales in the
future. Amazon has been particularly focused on expanding its $99
Prime membership, adding new goodies like free same-day shipping in
some markets.
Amazon reported revenue rose to $23.185 billion from $19.34
billion a year earlier. On a per-share basis, the company's profit
was 19 cents, up from a loss of 27 cents in the year-earlier
period.
Analysts had forecast a loss of 13 cents per share on sales of
$22.4 billion, according to the average of estimates compiled by
Thomson Reuters.
For the third quarter, Amazon said it expects net sales of
between $23.3 billion and $25.5 billion, compared with sales of
$20.6 billion in last year's period.
The company also forecast operating income between a loss of
$480 million and a gain of $70 million, compared with a loss of
$544 million in year-ago third quarter.
Operating expenses for things like package handling, marketing
and streaming video content rose to $22.72 billion from $19.36
billion, an indication of Amazon's continued willingness to plow
nearly all of it cash back into the business.
Amazon Web Services, its cloud computing division, disclosed
sales for just the second time in Amazon's 20-year history. Some
believe the unit could operate on a stand-alone basis and, because
of its growth, is a primary reason to invest in Amazon.
Those sales rose to $1.82 billion from $1 billion a year
earlier, and operating profit increased to $391 million from $77
million.
Though Amazon faces new competition from startups promising
speedy delivery of goods from local stores, as well as new upstart
Jet.com Inc., it continues to forge ahead by building new sprawling
warehouses in places like Kenosha, Wis. That could help it succeed
in getting merchandise to its customers in two days or faster, a
potential competitive advantage as it seeks to steal marketshare
from brick-and-mortar retailers.
Write to Greg Bensinger at greg.bensinger@wsj.com
Access Investor Kit for Amazon.com, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0231351067
Subscribe to WSJ: http://online.wsj.com?mod=djnwires