Published: Sun, February 03, 2019
Money | By Ralph Mccoy

Amazon makes major leap in ad industry with $10 billion year

Amazon makes major leap in ad industry with $10 billion year

Amazon's "other" business segment - consisting mainly of its fast-growing advertising business - generated almost $3.8 billion in sales in the quarter, up 97 percent. More customers signed up for Prime in 2018 than in any other year, we're told. Management expects revenue for the period to rise 10% to 18% year over year to between $56 billion and $60 billion. Profits hit $3 billion, compared to $1.9 billion a year ago.

For the full year, net sales increased 31% to $232.9 billion.

Olsavsky made the comment on the company's fourth quarter earnings call, responding to a question asking for an update on the company's ambitions in the video space.

VidMob uses another thriving part of Amazon's business, Amazon Web Services, which is a cloud computing system for enterprise customers.

While growth in Amazon's maturing North American business slowed, the company's worldwide sales picked up steam after it threw resources behind markets such as India and Australia. Excluding a foreign-exchange impact, the growth rate would be about 2 percentage points higher, said Chief Financial Officer Brian Olsavsky. Chief Executive Officer Jeff Bezos has pledged about $5 billion to chase growth in India, seeing the world's second-most populous country as the best frontier for Amazon's global push.

For the fourth quarter, Amazon North America delivered more operating income than AWS-$2.25 billion to $2.18 billion.

Amazon shares have risen 14 percent since the beginning of the year, while the Standard & Poor's 500 stock index has increased almost 8 percent and the Nasdaq composite has risen 9.7 percent.

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EPS came in at $6.04 on revenue of $72.4 billion, compared to expectations of $5.65 per share on $71.61 billion in revenue. Following the announcement to increase the minimum wage to $15, Amazon received a company record of approximately 850,000 work applications for hourly positions in the October 2018, more than double the previous record for the most applications received in a month.

After an initial spike, Amazon stock fell after-hours from a close of $1,718.73 to $1,625 at publication time on weaker guidance for the next quarter than investors had hoped for.

Market capitalization. Grew to $840 billion Thursday afternoon, more than Microsoft, Apple, or any other publicly traded company.

In the AVOD space, Amazon subsidiary the Internet Movie Database (IMDb), launched an ad-supported streaming service called Freedive in January.

Amazon also owns Whole Foods, Fire TV, and makes Echo devices, which run its home-assistant, Alexa.

Bezos pointed to the Amazon-branded Echo speakers that are at the heart of the new strategy. The company now ranks alongside Alphabet Inc's Google and Facebook Inc as titans in marketing, letting these same merchants pay for high placement in Amazon's search results. That may drag down Amazon's recent big jumps in profit.

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