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Amazon surprises Wall Street with huge profits, optimistic prospects

(Reuters) – Amazon.com Inc. ( AMZN.O ) March Retail and Cloud Computing showed no signs of slowing on Thursday as the company reported an increase in first quarter revenue and profit Both exceed expectations.

FILE PHOTO: Amazon's corporate logo is displayed on April 20, 201
8 at the company's office in Bangalore, India. REUTERS / Abhishek N. Chinnappa / File Photo

Regardless, the company and the US National Football League announced a deal to stream Thursday night games during the 2018 and 2019 seasons on Amazon Prime Video.

Amazon shares rose 6 percent in after-hours trading as they also forecasted a profit jump in the second quarter. [Seattle-based Amazon] wins the business of older giants by delivering virtually every product to customers at a low cost, and sometimes even faster than it takes to buy goods from a store. The company acquired Whole Foods Market last year for $ 13.7 billion to bring food to its doorstep.

Amazon's results contradicted expectations that it would bring more profit into investment as in the past. The world's largest online retailer announced that its net income for the quarter ended March 31 had risen to $ 1.6 billion, or $ 3.27 per share. Analysts expected an average of $ 1.26 per share, according to Thomson Reuters I / B / E / S.

Revenues increased 43 percent to $ 51.0 billion in the quarter, beating analysts' average estimate of $ 49.8 billion.

The rapid rise of Amazon and its chief executive Jeff Bezos, now the richest person in the world, has caught the attention of US President Donald Trump. Critical Twitter posts on Amazon and the Washington Post, which Bezos owns, have unproved by Trump that Amazon has not paid enough money to the US Postal Service to cover the shipping costs.

Success is "the best revenge that Bezos can get against the government because of its veiled sales tax threats and does not pay its fair share," said Wedbush Securities analyst Michael Pachter to Reuters on Wednesday.

Prime, Amazon's loyalty club, which includes fast shipping, video streaming and other benefits, was the key to revenue leaps. Members – now more than 100 million worldwide – spend above average on Amazon.

The company has recently increased monthly fees for US prime members, which Cowen & Co estimates is about 30 percent of subscribers. Prime and other subscription revenues increased 60 percent to $ 3.1 billion.

Amazon Web Services (AWS), which handles data and computing for large companies in the cloud, also reported a leap in profits over the previous quarter. Turnover rose 49 percent to $ 5.44 billion, exceeding the $ 5.25 billion average estimate, according to Thomson Reuters I / B / E / S.

Amazon announced that the company expects operating income of $ 1.1- $ 1.9 billion for the quarter compared to $ 628 million a year ago.


The Amazon share outperformed the S & P 500 .SPX and has risen 30 percent since the close on Thursday, compared to a decline of less than 1 percent.

His shares are traded at a premium to many other companies. The price-earnings ratio of the share is more than 11 times the price of the cloud computing competition Microsoft Corp ( MSFT.O ).

The company is notorious for running low profit margins. But his big bets on new services and entry into new industries have rewarded shareholders over the past decade.

Amazon continues to invest in a variety of areas. The company plans to spend more on video content this year, including its renewed agreement to stream Thursday football matches and a prequel television series on The Lord of the Rings in the works. Wedbush's tenant estimates that spending on content this year will be $ 6 billion or more, up from $ 5 billion in 2017.

Earlier this year, Amazon announced a partnership with JPMorgan Chase & Co ( JPM.N ) and Berkshire Hathaway Inc ( BRKa.N ) to see how healthcare costs can be reduced for hundreds of thousands of their employees.

And Amazon is expanding its footprint outside the United States, especially in India. International operating loss increased 29 percent to $ 622 million in the first quarter.

Amazon's total number of employees increased 60 percent year-on-year to 563,100 full-time and part-time employees, thanks to a hiring cycle and an influx of Whole Foods Market employees.

Reporting by Jeffrey Dastin in San Francisco and Arjun Panchadar in Bangalore; Arrangement by Bernard Orr and Lisa Shumaker

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