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Amazon posts quarterly profit, carried by strong AWS earnings
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MacNN Staff
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Oct 23, 2015, 10:53 AM
Amazon yesterday announced financial results for its third quarter that ended on September 30. Net sales increased 23% to $25.4 billion in the third quarter, compared with $20.6 billion in third quarter 2014. On the strength of that, and the massive growth from cloud service sales, the company posted a net income of $79 million, compared with net loss of $437 million in the third quarter of 2014.

Amazon Web Services itself posted $2.1 billion in revenue, with an accompanying $521 million in profit. Wall Street was expecting some gains from AWS, but not at this magnitude -- the company was expected to lose $0.13 per share on $24.9 billion in revenue. As a result, Amazon stock started the trading day at $619.45 per share, but is now sitting at $600 per share, still up over six percent from yesterday's close.

Net sales for the crucial holiday quarter are expected to be between $33.50 billion and $36.75 billion, or to grow between 14 and 25 percent compared with fourth quarter 2014. Operating income is expected to be between $80 million and $1.28 billion, compared to $591 million in fourth quarter 2014. Amazon's guidance includes approximately $620 million for stock-based compensation and amortization of intangible assets, and it assumes that no additional business acquisitions, investments, or legal settlements are concluded.
( Last edited by NewsPoster; Oct 23, 2015 at 10:53 AM. )
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Oct 23, 2015, 06:26 PM
Just read the end of that second paragraph a few times to get a glimpse into Wall Street thinking: everyone on Wall Street was expecting Amazon to LOSE Money, and so they had pumped up the stock up by 10% (from $560 to $620), because I assume losing money is a good thing in Wall Street (who would have thunk it). Then when they found out the company actually made a profit, they lowered it to $600, because they must have been disappointed by the fact that Amazon actually made money !!! It all makes sense.
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Oct 23, 2015, 07:31 PM
buy on the rumor, sell on the news. That's all that's going on there. But yes, Wall Street is often bizarro world where black is white and up is down.
Charles Martin
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Oct 24, 2015, 03:09 PM
The important point that too many investors miss here is that Amazon can't make a real profit on its main business. AWS is a sideline borne of necessity, and while it is nice that it is doing well, it can't save the flawed business model. This would be like Microsoft being okay with Windows losing tons of money, but hey the Xbox is squeaking out a profit.
Charles Martin
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