Amazon profits steady after digesting Whole Foods

Amazon said Thursday profits held steady in the third quarter as the online giant boosted revenue from its acquisition of grocery chain Whole Foods and expansion of its computing hardware lineup.

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.

Amazon shares rallied 7.8 percent to $1,049 in after hours trade on the stronger-than-expected results.

In its earnings statement, Amazon founder and chief executive Jeff Bezos focused on Amazon's fast-growing digital assistant Alexa, included in its connected speakers and third-party products ranging from appliances to automobiles.

"In the last month alone, we've launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more," Bezos said.

"Customers have purchased tens of millions of Alexa-enabled devices... With thousands of developers and hardware makers building new Alexa skills and devices, the Alexa experience will continue to get even better."

Amazon said Whole Foods, the natural foods chain acquired this year, provided $1.3 billion in revenue and $21 million in operating income for the company.

Excluding the impact of Whole Foods, net sales were up 29 percent, Amazon said.

Its cloud computing arm Amazon Web Services accounted for $4.6 billion in revenue and $1.2 billion in operating income.

Amazon's expansion into new sectors and markets has lifted the company's share price and made Bezos one of the world's richest individuals -- briefly the richest at one point, according to one survey.

Along with its growing influence, Amazon has become one of the most valuable companies on the planet alongside US tech rivals Apple, Facebook and Google parent Alphabet.

Amazon said that for the fourth quarter, it expects revenues in a range of $56 to $60.5 billion, representing growth of 28 to 38 percent compared with last year.

- 'In good shape' -

Neil Saunders of the research firm GlobalData called the Amazon results "stellar," noting that Amazon has been able to drive growth from online sales with its Prime subscription service, which offers free delivery, video and other extras.

"Overall, Amazon is in very good shape," Saunders said in a research note.

"In some ways, the deterioration in profit doesn't matter, if only because the business has an enormous amount to show for its expenditure. These investments -- in services, devices, new ventures, pricing, international markets, and business services -- will all power growth in the years ahead."

As for Whole Foods, the analyst said "it is too early to conclusively say whether this is a success story" but that "initial signs are encouraging, and our data show some very slight movements on price perception... Amazon's approach is being noticed by consumers."

source: AFP