By Greg Bensinger
Amazon.com Inc. surprised investors by reporting an unexpected
profit along with the sharp sales gains that it regularly
produces.
Following the results, shares of the Seattle online retailer
jumped 18% to $567.50 in after-hours trading, which would represent
a new all-time high for the story and, for the moment, value Amazon
above Wal-Mart Stores Inc.
For the June quarter, Amazon earned $92 million, up from a
year-ago loss of $126 million and above the loss of $52.2 million
expected on average by analysts surveyed by Thomson Reuters.
Sales, meanwhile, rose a better-than-expected 20%.
A bright spot for Amazon was its cloud computing division,
Amazon Web Services, which 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.
Sales at the division rose 81% to $1.82 billion from $1 billion
a year earlier, while operating profit more than quadrupled to $391
million from $77 million.
Amazon's overall sales growth has kept investors happy in recent
quarters--the stock was up more than 50% this year before the
earnings report Thursday--even as the company continued to report
losses.
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's total revenue in the second quarter 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. Analysts, on average, were
expecting $23.89 billion.
The company also forecast third-quarter 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 its cash back into the business.
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 market share
from brick-and-mortar retailers.
Write to Greg Bensinger at greg.bensinger@wsj.com
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