Amazon profits steady after digesting Whole Foods

Amazon profits steady after digesting Whole Foods

Amazon profits steady after digesting Whole Foods, Inc. shares were trading at $972.15 per share on Thursday afternoon, down $0.76 (-0.08%).

Profit for the quarter was $256 million, up slightly from $252 million a year ago while revenue jumped 34 percent to $43.7 billion for the company which has grown from its online retail roots to cloud computing, streaming video, artificial intelligence and more.

The Seattle company's revenue gains were thanks in part to its $13.7 billion acquisition of Whole Foods, which brought in $1.3 billion in sales during the three-month period.

O'Shea also noted revenue growth and operating income at AWS "more than offset" the loss Amazon took on through investments in its global business.

The company's revenue guidance for the quarter topped out at $41.75 billion.

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With e-commerce accounting for almost 90% of Amazon's total revenue, it's easy to think that Amazon's online retail business drives the bulk of the company's profits.

Amazon gave fourth quarter guidance in the range of $56.0 billion and $60.5 billion, right in-line with street estimates of $58.9 billion.

While there has been a massive rush to create 3rd party skills for the Amazon Echo, most have either been toy applications of extensions of other services, because until recently there was no way for applications to pay for themselves.

With holiday season shopping revenues to look forward to in Q4, Amazon is no doubt very happy with these results, and is predicting growth of between 28 and 38 per cent for the final quarter of the year. "Of those services, Subscriptions (which includes Prime) and Other (which includes advertising) are its fastest-growing businesses". Operating income is expected to be between 300 million and 1.65 billion dollars compared with 1.3 billion dollars in fourth quarter 2016.

"And it's working - customers have purchased tens of millions of Alexa-enabled devices, given Echo devices over 100,000 5-star reviews, and active customers are up more than five times since the same time a year ago". Going into today's earnings report, Amazon shares had risen nearly 30% this year. Plus, content and technology at Amazon continue to evolve, and several analysts noted the company's growth (and potential growth) via its connected devices and voice assistance. Anders Bylund owns shares of Amazon. Given Amazon's appetite for growth - even when it comes at the expense of near-term profitability - it seemed logical that Amazon might spend a significant sum integrating Whole Foods' operations into its business. That pushed operating income, including $21 million from Whole Foods Market, down 40% to $347 million.

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