Published: Fri, February 01, 2019
Money | By Ralph Mccoy

Amazon earnings beat, guidance disappoints

Amazon earnings beat, guidance disappoints

They still have some breathing room, however, as Facebook this week reported more than $16 billion in ad sales in just the fourth-quarter of past year, while Google is expected to top $135 billion in ad revenue in 2018 when it reports next week.

Company shares were down less than 1 percent after the market closed.

"Right now we are working through some next issues in both cities", Chief Financial Officer Brian Olsavsky said on the call.

Nonetheless, he said that compared to many other retailers, the firm's retail sales figures were still strong.

Amazon's workforce grew by 48 percent in 2016 and 38 percent in 2017, not including major acquisitions, Olsavsky said.

Ahead of Amazon's earnings announcement, there were plenty of concerns that the 25-year-old e-commerce phenom was finally starting to act its age.

The midpoint of the revenue-growth guidance, 14 percent, would represent the slowest quarterly growth at Amazon since at least 2012. This time that didn't happen.

Shoppers will spend $484 billion globally on Amazon this year, up 26 per cent from 2018, and the Seattle-based company will capture more than half of all online spending in the USA, according to EMarketer Inc.

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As for hard numbers, that's about it. Both are double-digit improvements over the previous year. Last year North American revenues in the quarter were $37.3bn and operating income was $1.7bn.

Amazon has forecast lower-than-expected sales for the first three months of the year sparking investor fears over slowing growth.

"With so many opportunities, the biggest problem facing Amazon CEO Jeff Bezos is where to focus the attention", he added. But so far that hasn't appeared to happen. Advertising and AWS are Amazon's fastest-growing segments, and the two are increasingly being used in tandem by marketing technology companies and ad agencies. With Amazon controlling 50 percent of e-commerce purchases in the United States, more sellers have an incentive to fork over money for these ads.

Amazon, the world's largest company by market capitalisation, reported improved earnings and profits late on Thursday.

Dave Fildes, Amazon's Director of Investor Relations, said on Thursday's earnings conference call that Amazon is "continually evolving" its tools and services for advertisers, to "make sure they've got a variety of ways to meet their goals".

Amazon sells search ads similar to Google's search system and it sells display and video ads. On average, analysts had expected revenue of $71.88 billion.

Revenue in its Amazon Web Services cloud business surged 45.3 percent to $7.43 billion to beat estimate of $7.26 billion.

"Amazon's Q4 was impressive on multiple fronts, with the strength of AWSalmost becoming a "broken record" as it continued to generate nearly geometric sales growth with still-high margins, more than offsetting investment-impacted worldwide operating losses", said Charlie O'Shea, lead analyst for Amazon at Moody's.

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