From The Wall Street Journal:
Amazon.com Inc. on Thursday delivered the largest quarterly profit in its 20-year history, but investors apparently are thirsty for more after subsisting on thin margins for years.
The online retailer’s shares plunged as much as 15% in after-hours trading, erasing more than $30 billion in market value despite a profit that more than doubled to $482 million in the holiday period. It was also the third straight quarter of profits, the first time Amazon has done so in more than three years.
The failure to meet outsize expectations underscores the pressure Amazon now faces after teasing Wall Street in recent quarters with tighter costs and black ink. Amazon until recently put nearly every dollar it generated back into the business.
The company was one of the big growth stories among technology stocks in 2015, more than doubling its market value to over $300 billion last year and easily outperforming other tech giants like Alphabet Inc., Apple Inc. and Facebook Inc.
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For the year, Amazon passed $100 billion in revenue for the first time in its two-decade history. It took rival Wal-Mart Stores Inc. 35 years to reach the same mark in 1997, two years after Amazon.com opened for business.
Amazon has captured more customers by aggressively building out new warehouses near urban centers to speed deliveries and by bulking up its Prime unlimited shipping membership with streaming video and other benefits.
And it has built up a huge lead on rivals in offering cloud-computing services through its lucrative Amazon Web Services unit, which rents computing power to other companies from thousands of servers. Sales from that business jumped 69% to $2.4 billion, while operating profit nearly tripled to $687 million, reinforcing its place as Amazon’s fast-rising growth engine. Still, AWS’s revenue growth slowed from 78% in the previous three months as Amazon drained more costs.
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The company said nearly half of the units of merchandise it sold in the quarter came from third-party sellers who store their goods in Amazon warehouses. That is good news for Amazon because most observers assume such sales are generally more profitable than the merchandise it purchases itself for resale.
Link to the rest at The Wall Street Journal (Link may expire)