Amazon makes a profit shock

A shocked Baby (2)_fullAmazon posted an unexpected quarterly profit and predicted it would have a good third quarter something which has not happened within living memory.

Well our memories at least, but we are getting old.

It is the first time since 2014 that Amazon reported a profit and has worried by investors by making heavy spending on new ventures.

Amazon’s shares had languished for much of last year as the company failed to deliver sustainable profits. The shares traded as low as $284 last October.

Chief Financial Officer Brian Olsavsky told analysts the money spinner was Prime, which for $99 a year also provides exclusive access to certain movies, music and Kindle books. It is getting new subscribers at rates “higher than we’ve ever seen.”

Membership was growing faster outside the United States than inside, helped in part by a recent one-day sale event called “Prime Day,” Amazon said.

“Growth has been fuelled in large part by Prime growth and item selection growth. It’s been a huge driver both in North America and international segments,” Olsavsky said.

For the second quarter, Amazon reported a profit of $92 million compared with a loss of $126 million a year earlier. Revenue rose 19.9 percent to $23.19 billion.

Analysts expected a loss on a revenue of $22.39 billion.

Sales in North America, the company’s biggest market, rose 25.5 percent to $13.8 billion from a year earlier, helped by strong demand for electronics and general goods.

Revenue from the cloud computing division, Amazon Web Services, soared 81.5 per cent to $1.82 billion, accounting for nearly 8 per cent of the quarter’s revenue.

Amazon Web Services is seen as a core engine of growth, with Amazon Prime and Marketplace, where the company acts as a go-between for third-party sellers.

The company forecast net sales would grow 13 per cent to 24 per cent, to $23.3 billion to $25.5 billion, in the third quarter, well above analysts’ consensus estimate of $23.89 billion.

Amazon estimated third-quarter operating results ranging from a loss of $480 million to income of $70 million.