Amazon’s Earnings Surprise

Amazon.com beat Wall Street’s expectations for the first quarter in spite of a 35% fall in earnings for the period.
The e-commerce giant gave its usually traditional forecast for the current quarter which was below analysts’ forecasts.

Amazon (AMZN) said that the surge in earnings was partly because of improved earnings from increasing third-party sales, meaning other traders who sell merchandise over the company’s web site. The E-tailer just books a part of these sales as income; however these dealings usually offer higher profit margins compared to the items which the company sells itself.

However Amazon is still spending to maintain its expansion, with preparations to open 13 new distribution centers during current year. The company also employed aggressively during the quarter, hiring 9,400 workers to bring its total work force to 65,600. Operating expenditures increased by 36% to $13 billion for the quarter.

For the January-March quarter, the net income of Amazon was $130 million, or 28 cents per share as compared to the net income of $201 million, or 44 cents per share, during the same period last year. Analysts forecasted earnings of 6 cents a share on revenue of $12.9 billion.

Operating income dropped by 40% to $192 million. Revenue increased by 34% to $13.18 billion.

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Leo Pierson

About Leo Pierson

Former partner in a real estate management firm, Leo, has been active in the market for the last 8 years. Ex-blogger on penny stocks, now focused on long term growth stocks, Leo provides valuable market snapshots each day as part of our editorial team.

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