AWS now makes up over half of all Amazon revenue

Irving Hamilton
February 3, 2019

But guidance for first-quarter revenue was weaker than expected, at $56 billion to $60 billion, below Wall Street expectations of $61 billion.

Shares of the company fell 1.1 percent to $1,700 in trading after the bell.

Amazon has the same issues as other retailers in that it sees a huge wave of orders during the ever-important holiday season at the end of each year. "Third-party sales are growing faster than first-party sales, and almost 200,000 small and medium-sized businesses surpassed $100,000 in sales in Amazon's stores in 2018".

Net income increased to $3.0 billion, or $6.04 per diluted share, compared with net income of $1.9 billion, or $3.75 per diluted share, past year and easily topping Street estimates of $5.65 a share.

Yet, investors turned their attention overseas where Amazon has long lost money in the hopes of future profit.

"We are getting more and more creative around getting efficiency up and getting our cost of acquisition down".

Amazon began removing a wide array of products from its India website late on Thursday to comply with the new foreign investment curbs that kick in on February 1 and disallow companies from selling products via vendors in which they have an equity interest.

"At some point, they're going to have to look for more sales opportunities outside of traditional retail, otherwise the law of large numbers is going to have a greater impact on future sales growth", said Tom Forte, managing director and senior research analyst at D.A. Davidson.

On a 30-minute earnings call with analysts, Bezos' planned split from wife MacKenzie never came up - despite brewing concerns over how the couple of 25 years might divide up their 16 percent stake in Amazon and whether Bezos' role in the company could change as a result.

Brexit: Unilever stockpiles Ben & Jerry's and Magnums
The company said Thursday that sales in the fourth quarter of 2018 fell 5.3 percent to 12.15 billion euros ($13.9 billion). Former CEO Paul Polman was pushing for Unilever's headquarters to be moved to Amsterdam from London in light of Brexit .

A worker sorts parcels at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017.

Amazon, which recently surpassed Microsoft as the most valuable company in the USA, reported net income of $3.03 billion during the last three months of 2018.

Olsavsky said that investments would increase this year. The company had little need to splurge in 2018 thanks to prior spending on warehouses, headcount and other areas, boosting profit.

"As a result, the profit story in '19 may not be as good as it was in '18", said Tom Forte, analyst at D.A. Davidson, adding that this might not be a bad thing. It was the second quarter in a row Amazon predicted softer-than-expected revenue. Its cloud services business grew 45% over the last quarter of 2017. Sales came in at $72.4 billion, beating estimates by $580 million.

Amazon's "other" business segment - consisting mainly of its fast-growing advertising business - generated almost $3.8 billion in sales in the quarter, up 97 percent.

"That number will move around", Olsavsky said on the earnings call.

Amazon topped $10 billion in revenue for the advertising side of its business in 2018, as the e-commerce giant invested in its marketing products to entice more brands to spend on its platform and promote their products.

This expansive customer base has lured merchants to sell goods on the company's marketplace, to the point where more than half of products sold on Amazon came from third parties earlier previous year.

Amazon has been racing Apple and Google for dominance in the smart assistant market. Amazon stock closed at $1,718 on Thursday, a rise of 18 percent over the last 12 months, and its latest market value of $840.4 billion makes it the most valuable public company in the world.

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