Amazon posts historic profit on its sales

Online retailer, Amazon.com Inc, has reported the biggest profit in its history. The company boasted of $2 billion in profits, as millions of new customers used its Prime fast-shipping club during the holiday season, with changes to U.S. tax law adding to its bottom line.


Its shares rose more than 6 percent in extended trading, despite previously closing down 4 percent
on the Nasdaq. Seattle-based Amazon is using fast shipping, television shows exclusive to its website and extends into new technology, like its voice-controlled Alexa devices, attracting high-spending Prime members. Amazon said price cuts at Whole Foods Market are helping it win grocery sales.


Its net income more than doubled to $1.86 billion, or $3.75 per share in the fourth quarter which ended Dec. 31 with a provisional $789 million profit boost from the U.S. Republican tax bill passed in December a. Analysts on average were expecting just $1.85 per share, according to Thomson Reuters.

“This was another blow-out quarter for Amazon,” said GBH Insights analyst Daniel Ives. “The retail strength was eye-popping as the company had a banner holiday season and looked to capture roughly 50 percent of all e-commerce holiday season sales.”

The period, from before the U.S. Thanksgiving holiday through to the New Year was Amazon’s biggest-ever by revenue. Sales eclipsed estimates, rising 38 percent to $60.5 billion in the quarter.

The company’s two-hour Prime Now service fast delivery, helped to attract holiday shoppers seeking to avoid the crowds of big box retailers. Amazon said the service saw more than 4 million sign-ups in one week alone last quarter, and subscription fees revenue grew 49 percent to $3.2 billion.

Analyst say the figure is expected to rise this quarter due to the company recently raising the monthly fee for Prime plans, affecting some 30 percent of subscribers. 60 million, or close to half of all U.S. households, are assessed to have subscribed to the Prime service. Advertising and other revenue rose 62 percent to $1.74 billion.

Amazon’s chief financial officer, Brian Olsavsky, said that advertising was “a key contributor” to the company’s growing profit margin. Amazon’s voice aide Alexa, which is embedded in the company’s Echo speakers and Fire TV players, as well as some cars and house gadgets was surprising successful with millions of Amazon customers making orders by voice with Alexa in the past year.

Jeff Bezos, Amazon’s founder and chief executive in a statement added: “Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down.”

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