Amazon -- that's right, Amazon -- posts big profit
The world's largest online retailer on Thursday reported unexpectedly strong sales and earnings in the first quarter, blowing out analysts' projections and driving shares up more 12 percent after hours. The report marked Amazon's fourth-straight profitable quarter and Amazon's best-ever quarterly profit yet.
This was not business as usual.
After typically posting razor-thin (or nonexistent) profits for years despite skyrocketing revenues, Amazon may finally be making good on Wall Street's expectations that it will, someday, become a fantastically profitable company. Yet with CEO Jeff Bezos' bevy of growth initiatives still in the works, this quarter may be more of a blip than Amazon's new normal.
So far, Amazon has made huge investments on new distribution centers, new consumer electronics, original TV programming, advertising with Alec Baldwin, fashion and home goods, grocery deliveries, delivery drones and new products for its cloud-computing services. None of those investment projects are going away anytime soon.
But even as operating expenses surged 25 percent during the quarter, revenue was even stronger.
Sales reached \\$29.1 billion, up 28 percent, while Amazon swung to a profit of \\$513 million, from a loss of \\$57 million the year earlier. To put that figure in perspective, Amazon posted a profit of \\$596 million for all of 2015.
Amazon Web Services, which rents out computer-server space to other companies, was a major contributor to the earnings boost. Operating income from the division reaching \\$604 million, up from \\$195 million a year ago.
"Amazon continues to invest significant sums in both Amazon Web Services and content, among other areas," Moody's retail analyst Charlie O'Shea said, "and we continue to believe that continued expansion of its content eco-system will generate positive returns."