{"id":57893,"date":"2018-02-02T08:06:55","date_gmt":"2018-02-02T08:06:55","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=57893"},"modified":"2018-02-02T08:06:55","modified_gmt":"2018-02-02T08:06:55","slug":"amazon-posts-largest-profit-history-sales-tax-boost","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/amazon-posts-largest-profit-history-sales-tax-boost.html","title":{"rendered":"Amazon posts largest profit in its history on sales, tax boost"},"content":{"rendered":"

Amazon posts largest profit in its history on sales, tax boost<\/span><\/strong><\/span><\/h2>\n

(Reuters) – Amazon.com Inc on Thursday reported a profit near $2 billion, the largest in its history, as the online retailer drew millions of new customers to its Prime fast-shipping club for the holiday season and as changes to U.S. tax law added to its bottom line.<\/span><\/p>\n

Shares rose more than 6 percent in extended trading, after previously closing down 4 percent on the Nasdaq.<\/span><\/p>\n

Seattle-based Amazon is using fast shipping, television shows exclusive to its website and forays into new technology, such as its voice-controlled Alexa devices, to attract high-spending Prime members. Amazon said price cuts at Whole Foods Market, which it acquired for $13.7 billion last year, are helping it win grocery sales, too.<\/span><\/p>\n

The world’s largest online retailer said net income more than doubled to $1.86 billion, or $3.75 per share in the fourth quarter ended Dec. 31. Its profit received a provisional $789 million boost from the U.S. Republican tax bill passed in December. Analysts on average were expecting just $1.85 per share, according to Thomson Reuters I\/B\/E\/S. (tmsnrt.rs\/24gibla)<\/span><\/p>\n

\u201cThis was another blow-out quarter for Amazon,\u201d said GBH Insights analyst Daniel Ives. \u201cThe retail strength was eye-popping as the company had a banner holiday season and looked to capture roughly 50 percent of all e-commerce holiday season sales.\u201d<\/span><\/p>\n

As expected, the period running from before the U.S. Thanksgiving holiday through New Years was Amazon\u2019s biggest-ever by revenue. Sales rose 38 percent to $60.5 billion in the quarter, beating estimates.<\/span><\/p>\n

The company\u2019s fast delivery, like its two-hour Prime Now service, has helped win over holiday shoppers eager to avoid the crowds of big box retailers. Prime saw more than 4 million sign-ups in one week alone last quarter, and revenue from subscription fees grew 49 percent to $3.2 billion, Amazon said.<\/span><\/p>\n

That figure is expected to rise this quarter in part because the company recently raised the fee for month-to-month Prime plans, affecting some 30 percent of subscribers, according to analysts at Cowen & Co. Some 60 million, or close to half of all U.S. households, are estimated to have Prime subscriptions.<\/span><\/p>\n

Advertising and other revenue rose 62 percent to $1.74 billion.<\/span><\/p>\n

Brian Olsavsky, Amazon\u2019s chief financial officer, said on a call with analysts that advertising was \u201ca key contributor\u201d to the company\u2019s growing profit margin. Alphabet Inc\u2019s Google on Thursday reported ad revenue of $27.2 billion by comparison.<\/span><\/p>\n

Perhaps the surprise star of the past quarter was Amazon\u2019s voice aide Alexa, embedded in the company\u2019s Echo speakers and Fire TV players, as well as some cars and house gadgets. Millions of Amazon customers ordered goods by voice with Alexa in the past year, said Olsavsky on a separate call with reporters.<\/span><\/p>\n

\u201cOur 2017 projections for Alexa were very optimistic, and we far exceeded them,\u201d added Jeff Bezos, Amazon\u2019s founder and chief executive, in a statement. \u201cWe don\u2019t see positive surprises of this magnitude very often \u2014 expect us to double down.\u201d<\/span><\/p>\n

HEAVY SPENDING<\/span><\/p>\n

Amazon\u2019s stock has outperformed the S&P 500, rising almost 50 percent since the start of the fourth quarter to Thursday\u2019s close, compared with the S&P\u2019s 12 percent rise.<\/span><\/p>\n

Its shares trade at a premium to those of many peers. The stock\u2019s price-to-earnings ratio is nearly 12 times that of cloud computing rival Microsoft Corp, for instance.<\/span><\/p>\n

Amazon Web Services (AWS), which is dueling with Microsoft to handle data and computing for large enterprises, saw its profit margin expand from the third quarter.<\/span><\/p>\n

This was a \u201csign of platform strength despite increasing competition,\u201d said Baird Equity Research analyst Colin Sebastian in a research note.<\/span><\/p>\n

AWS posted a 45 percent rise in sales to $5.1 billion.<\/span><\/p>\n

Amazon said it expects operating profit in the current quarter of between $300 million and $1 billion. Analysts were expecting $1.5 billion, according to analytics firm FactSet.<\/span><\/p>\n

Olsavsky, Amazon\u2019s CFO, told reporters, \u201cWe\u2019re still in heavy investment mode.\u201d<\/span><\/p>\n

The company has become notorious for running on a low profit margin. Yet its big bets on new services and entry into new industries have reaped shareholders rewards over the past decade, including its founder Bezos, now the richest man in the world.<\/span><\/p>\n

Amazon continues to spend on a wide array of areas. It is expanding its retail footprint outside the United States, particularly in India, and almost doubled its international operating loss to $919 million in the fourth quarter. Amazon\u2019s global headcount is up 66 percent from a year ago at 566,000 full-time and part-time employees, thanks to a hiring spree and an influx of workers from Whole Foods Market.<\/span><\/p>\n

And earlier this week, it 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.<\/span><\/p>\n

The company said it plans to spend more on video content this year as well, with a prequel television series to \u201cThe Lord of the Rings\u201d in the works. Analysts estimate Amazon spent $4.5 billion or more in 2017.<\/span><\/p>\n

\u201cRevenue and margins vastly exceeded expectations, and cost control was impressive, so that\u2019s what people are focused on,\u201d said Wedbush Securities analyst Michael Pachter, adding, \u201cIt\u2019s clear that they will spend a lot more in 2018.\u201d<\/span><\/p>\n

Source:-\u00a0https:\/\/www.reuters.com\/article\/us-amazon-com-results\/amazon-posts-largest-profit-in-its-history-on-sales-tax-boost-idUSKBN1FL6H0<\/span><\/p>\n

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