Home News Business News Quarterly profit of Amazon for the first time surpassed 1 billion USD

Quarterly profit of Amazon for the first time surpassed 1 billion USD

Amazon profit

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The quarterly profit of the US technology giant Amazon.com for the first time surpassed 1 billion USD. The company’s ambition is to have a stronger financial discipline while expanding its ambitions beyond online retailing.
The earnings of Amazon increased more than twice to 1.9 billion USD during the fourth quarter’s Christmas season, boosting the company’s profitability in two and a half years. For a long time, the online retailer was putting much of the money it earned to produce new products and they turned to profit.
The quarterly profit was supported by single amount of 789 million USD of tax relief related with the new US tax law. Amazon also attributes good results to its strong performance in the cloud computing division, as well as the growth in advertising services, such as product placement in search results, and better warehouse performance against record sales during the Christmas season.
“There are ongoing efforts to reduce costs and increase productivity in many areas of the company, but especially in our warehouses,” says the Chief Financial Officer of Amazon, Brian Olsavsky.
Amazon’s revenue in the fourth quarter rose by 38% to 60.5 billion USD, beating analysts expectations of 59.83 billion USD.
The revenue growth generally exceeds costs, while the supply costs, which increase by 31%, slow down the rise in the levels in recent quarters, particularly remarkable during the holiday season.
Amazon Web Services has increased revenue by 45% to 5.11 billion USD. The division, which leases computing power to various companies, government agencies and other corporations, has become a major factor in keeping Amazon profitable. The operating profit of the division expanded by 46% to 1.35 billion USD.
However, it faces increased competition from Microsoft and Alphabet.
Amazon also said it expects revenue in the current quarter to be in the range from 47.75 billion USD to 50.75 billion USD, representing an increase between 34% and 42% on an annual basis. The operating profit will be in the range between 300 million USD and 1 billion USD, compared to $ 1 billion USD an year ago.
The revenue growth reflects the growing scale and scope of Amazon’s business since more than two decades ago, Jeff Bezos founded his online bookstore. The company now holds about three-quarters of the market for smart speakers with Echo devices and has built a large Hollywood studio. It provides its own media packages and dominates cloud computing services, with Amazon Web Services holding more than 40% of the market.
Amazon also boosted traditional retail after buying the Whole Foods chain with its 460 stores for about 13.5 billion USD. Amazon has announced it will cut prices and add additional incentives to buyers, but has not yet made too many drastic changes. The transaction helped to the company to sell more groceries.
The fourth quarter was the first to include the results of Whole Foods. The sales of “physical stores”, which include mainly Whole Foods and several other Amazon-owned stores, amounted to 4.52 billion USD, representing about 7% of Amazon’s total revenue. The chain Whole Foods reported approximately 3.5 billion USD sales an year ago.
Amazon has grown its core business in retail by opening its Amazon Go cashless store last month after one year delay. The company now generates an average of 40 cents of every dollar spent online in the United States.
Earlier this week, Amazon, Berkshire and JPMorgan announced plans to establish an independent, technology-focused company to provide employees and their families with high-quality and transparent healthcare at a reasonable price. The healthcare company of the three US companies will be exempt from the obligation to generate profits. The goal of Amazon, Berkshire and JPMorgan is to increase employee satisfaction and reduce costs. This is extremely important for the growth of Amazon, which now has 566,000 employees compared to 541,900 in the third quarter.