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Amazon’s soaring first-quarter sales fail to impress investors

Warwick Ashford

Amazon reported a 32% jump in profits to $108m and a 23% increase in sales to $19.74bn in the first quarter of 2014.

Operating income, which is regarded as a better measure of profitability, fell 19% to $146m from $181m during the same period a year ago.

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But operating expenses eroded profits by increasing to $19.59bn, up 23% compared with the first quarter of 2013.

Analysts said the strong sales figures were not enough to boost the company's share price – which has fallen more than 15% this year – with very little market reaction, according to the BBC.

Jeff Bezos, founder and chief executive of Amazon, was upbeat. He said 2014 was off to a “kinetic start” and highlighted the burst of innovation that has taken place in the first quarter.

This included the launch of Amazon’s Fire TV video-streaming service and its Prime Pantry grocery delivery business.

Analysts said investors remain cautious and that Amazon’s share price is unlikely to make any significant gains until the company can prove that its recent innovations are turning a profit.

Bezos also highlighted that Amazon Web Services “significantly lowered prices” on EC2 (Elastic Compute Cloud), S3 (Simple Storage Service) and RDS (Relational Database Service), which he claimed would save customers “hundreds of millions of dollars” in the next few months.

S3 prices have been cut by an average of 51%, EC2 prices by up to 40%, and RDS prices by an average of 28%, the company said.

Amazon said net sales in the second quarter are expected to be between $18.1bn and $19.8bn, or to grow between 15% and 26% compared with second quarter 2013.


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