Amazon earnings report: Profits jump, but shares slump

Amazon earnings report: Profits jump, but shares slump

The online retail giant posted a fourth consecutive quarter of $1 billion-plus profit.

Amazon's total operating expenses jumped 22 per cent to $US52.9 billion in the third quarter. The company blamed accounting changes and cautioned that it was being conservative with its outlook. It purchased online pharmacy PillPack in June, which followed its US$13.7 billion acquisition of Whole Foods previous year to jump start its grocery business. That has resulted in rollercoaster profits in the past, but revenue has largely grown at a breakneck pace as consumers shifted shopping online and away from brick-and-mortar stores. "And when you're trading on 70 times expected earnings, it doesn't take much to jolt the share price".

CEO Jeff Bezos called out Amazon Business, its enterprise side, for much of its success.

For the current quarter ending in December, Amazon said it expects revenue in the range of $66.5 billion to $72.5 billion.

Alphabet gained 5.8 percent this year before Thursday and traded at 24 times expected earnings over the next year. The company this month pledged to pay all warehouse workers at least $US15 an hour, which will affect 400,000 employees in the U.S. and UK, Chief Financial Officer Brian Olsavsky said. The upcoming season is expected to benefit from a strong USA economy and low unemployment, with the National Retail Federation predicting consumer spending during the holidays rising 4 percent. Amazon had guided for net sales of between $54 billion-$57.5 billion for the quarter. "They had been hitting on all cylinders so this is something investors weren't ready for", Chaim Siegel, analyst at Elazar Advisors, said.

"Make no mistake, Amazon remains a behemoth in the online market - nor do we believe it is under any serious threat", Saunders said.

He said Google was "dead serious" about providing a safe workplace and that the report on Rubin and others was "difficult to read", but did not directly address the claims.

Amazon reported net income of US$2.88 billion, or US$5.75 a share in the third quarter, from US$256 million, or US52¢, a year earlier.

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After falling as low $1028.77, Shares of Alphabet were down about 3 percent to $1,071.01 after hours from their close at $1103.59.

That means the company is collecting less revenue but taking in a lucrative cut of others' sales - all the more profitable when merchants pay Amazon to handle their shipping.

"They're indifferent if they sell us their own merchandise or third-party merchandise, so they shouldn't be punished for the latter", said Michael Pachter, an analyst at Wedbush Securities.

Non-advertising revenue, such as from sales of mobile apps and cloud computing services, also came in slightly below expectations. Analysts projected US$3.9 billion.

But the company also saw a windfall from its retail operations, particularly those in North America.

Google has been fined $7.7 billion for antitrust violations in Europe over the last two years, and heightened attention on privacy, security, competition and the rise of artificial intelligence tools has led investors to fret about potentially costly regulatory scrutiny in the United States and elsewhere.

Revenue from Amazon Web Services, the company's fast-growing cloud services business, surged 45.7 percent to $6.68 billion, narrowly beating estimates of $6.67 billion.

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