Amazon has record high profits for the first quarter
Amazon’s recent results show: “Net sales increased 17% to $59.7 billion in the first quarter, compared with $51.0 billion in first quarter 2018. Excluding the $1.1 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 19% compared with first quarter 2018. Operating income increased to $4.4 billion in the first quarter, compared with operating income of $1.9 billion in first quarter 2018. Net income increased to $3.6 billion in the first quarter, or $7.09 per diluted share, compared with net income of $1.6 billion, or $3.27 per diluted share, in first quarter 2018.”
The profit was more than double what investor’s had been predicting, but revenue was in line with what Wall Street expected.
Amazon wants to continue its dominance over e-commerce, but it can only grow so much.
Amazon is the third most valuable company in the world, as only Microsoft and Apple are larger. Microsoft briefly became the largest the other day as reported in a Digital Journal article as it broke the $1 trillion level.
Company spending heavily on investments
CEO Jeff Bezos is investing heavily in artificial intelligence, the smart home, and physical retail space that may not produce profits for some time. The company is also relying heavily on cloud computing and advertising and less for its large e-commerce retail operations to maintain growth momentum.
The company is also increasing its spending on infrastructure and this will cut into profits. Amazon’s future appears to be in part dependent on the success of its smart home devices.
Brian Olsavsky, Amazon’s chief financial officer CFO said the company was spending a lot more than last year, and that this would mean lower profits. Olsavsky noted that Amazon was working on a one-day free Prime shipping project. However, it may take some time to improve logistics enough to handle various areas and products.
Amazon Web Service(AWS) still produces the most revenue for Amazon with $7.7 billion in revenue, marking a 41 percent increase from 2017. It generated $2.2 billion in profit. Many major tech companies rely on AWS cloud services as a means of powering their organizations.
Amazon’s physical stores
Just as companies such as Walmart and Target struggle to compete in the retail space, Amazon has entered the race also. However it has decided to close all of its 89 pop-up kiosks by the 29th of this month. Amazon is in the grocery business through its purchase of Whole Foods. It is using bigger discounts to attract customers and there are rumors the company could start its own grocery business.
Recent events at the company
Protests led the company to abandon New York City headquarters.
The CEO of Amazon Jeff Bezos divorced his wife. 25 percent of Bezos’ stock in the company valued at approximately $35 billion.
Amazon is expected to limit even further a small presence in China by closing off it service to third-party sellers. It is in effect surrendering it e-commerce footing in one of the globe’s largest markets
