Amazon Turns Investor Attention From Growth to Big Profits

Amazon Turns Investor Attention From Growth to Big Profits
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Amazon investors have traditionally given it a pass on money-losing quarters and narrow profit margins so long as revenue growth kept surpassing expectations, according to Bloomberg. That dynamic flipped last week, propelling the company into a potentially steadier phase.

Amazon reported a record second-quarter profit of $2.53 billion, or $5.07 per share. The company has generated net income of $4.16 billion in the first half of this year, more than the previous seven quarters combined, according to data compiled by Bloomberg. In 2014, Amazon lost $131 million. The results demonstrated that CEO Officer Jeff Bezos and his management team can finesse a massive global enterprise with about $200 billion in annual sales and more than half a million employees.

Even though second-quarter sales of $52.9 billion came in slightly below estimates of $53.4 billion, investors remain enthused, focusing instead on soaring profit that came in at more than double analysts’ projections. Chief Financial Officer Brian Olsavsky said growth of the Amazon Web Services cloud computing division and advertising sales propelled profit.

The retail business is also becoming more profitable thanks to job cuts earlier this year and a reorganization enabled by automation of tasks once handled by people. Amazon uses robots rather than people to shuffle inventory around its warehouses, and algorithms to power inventory decisions once made by white collar workers. Amazon even trimmed losses in its international business while funding expansions in India, Australia, the Middle East and Brazil.

Revenue from Amazon Web Services, its profitable cloud-computing division, jumped 49 percent to $6.1 billion. Growth, which Amazon reports without the impact of currency changes, was 48 percent in the first quarter. Sales from other businesses, mostly advertising, surged 129 percent to $2.2 billion, just below the growth rate from the first quarter. Second-quarter operating expenses rose 34 percent to $49.9 billion.