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Amazon Web Services had another record quarter, with Q1 revenue up to $2.57bn, representing growth of 64% year over year.
The company reported operating income of $1.1bn. The profits from AWS represented 56% of total operating income, even though the service amounted to less than 9% of total revenue. cementing its position as the most profitable business under the Amazon umbrella. Following shakey stock performance in the last quarter, Amazon reminded Wall Street that it could turn on the profits with the flick of a switch.
“AWS is growing because it is taking parts of the traditional hosting market, but it is also growing from deals in its ‘natural habitat’ of cloud-centric start-ups and smaller businesses,” said Kate Hanaghan of TechMarketView. “AWS has much to do to truly crack the large enterprise market, but its innovative approach to products and markets will make it an incredible force to be reckoned with as time goes on.”
Insight Enterprises saw profits fall 37% year on year, following a poor Q1 in its domestic market.
Consolidated net sales were $1.17bn, down 4% year over year, as an increase in net sales in the company's North America segment was offset by lower sales reported in EMEA and APAC.
However, improved gross margin performance in EMEA and APAC offset domestic shortfalls, leading to a gross profit of $161.1m, relatively flat year on year.
On a GAAP basis, earnings from operations decreased to $13.6m and diluted earnings per share was $0.18 in the first quarter of 2016
“Overall for the quarter, our EMEA and Asia Pacific businesses delivered strong earnings growth year over year,” stated Ken Lamneck, president and Chief CEO. “Our North America business has not met our profitability expectations in recent quarters. This has been related to a combination of a higher percentage of large and public sector clients as well as a shift in product mix resulting in lower data center sales. This could be somewhat cyclical, but market data suggests softer demand for data center solutions, and we are cautious about recovery in our product mix over the balance of this year.”
“We continue to be excited about our potential in North America but believed that we needed to take action to support our long-term profitable growth,” Lamneck added. “To that end, we recently concluded several cost reduction initiatives across our U.S. business that will allow us to better align our cost structure with current gross profit performance. Annualized savings from these actions are expected to be approximately $20m beginning in May of 2016.”
NetSuite had a strong first quarter, reporting $216m in revenue, up 31% year on year.
Cash flows from operations were $31.3m, up from $28.0m in the same period in the prior year.
On a GAAP basis, net loss was marginally higher at $29.7m, compared to $22.7m a year ago.
“NetSuite’s fiscal year 2016 started strong with record first quarter results as we grew year-over-year revenue by more than 30 percent for our fifteenth consecutive quarter,” said NetSuite CEO Zach Nelson. “Our financial results, and the results we are delivering for more than 10,000 companies operating around the globe, are driven by a new approach to building business software and by fantastic execution by our nearly 5,000 employees around the world.”
Juniper Networks saw revenue and profit rise in the first three months, meeting its lowered projections.
The network specialist reported preliminary revenue of $1.16bn to $1.22bn, lining up with analyst projections of $1.21bn.
Juniper reported a profit of $91.4m, or 23 cents a share, compared with $80.2m, or 19 cents a share, a year earlier.
"While our results for the March quarter were disappointing, we remain constructive on the full year and encouraged by early customer feedback on our recently introduced new products," said Rami Rahim, chief executive officer at Juniper Networks.
"We are taking a conservative and prudent approach to managing our business, while at the same time targeting areas that represent growth opportunities for the Company," said Ken Miller, chief financial officer. "We remain fully committed to shareholder value creation via a focus on introducing innovative products and services, operational excellence, and consistent capital returns."
Symantec revealed that its chief executive Michael Brown would step down after announcing that estimated fourth-quarter profit and revenue would fall short of the mark.
The maker of Norton Antivirus estimated revenue of $873m for the quarter ended April 1, lower than its forecast of $885-915m, and well short of Wall Street’s expectations of $901.2m.
Board Chairman Daniel Schulman said, “We thank Mike for guiding Symantec through a critical period of transition as President and CEO. Under his leadership, Symantec has successfully executed against the five priorities of its transformation, including divesting Veritas, developing a new product roadmap in enterprise security, improving our cost structure, strengthening our executive team, and continuing to return significant cash to shareholders.
“Given our solid financial foundation and clear path forward as the leader in cybersecurity, this is the right time to transition leadership for Symantec’s next chapter of growth. We appreciate Mike’s continued support as the Board conducts a thoughtful and comprehensive search for Symantec’s next CEO.”
The company’s shares had crashed 16.4% to $15.13 as trading came to a close on Thursday.
Datatec’s share price has been flat-lining since the company issued a profit warning earlier this week.
The parent company of Westcon and Logicalis said that it expected FY16 revenues of $6.5bn, flat year on year.
Earnings before interest, taxation, depreciation and amortisation in FY16 is expected to be approximately 22% below the $206.4m for FY15.
With operations in over 60 countries, Datatec was hit by the strong US dollar. The firm also blamed the ‘on-going restructuring’ in Westcon EMEA and Logicalis UK.
“The restructuring actions are expected to deliver operating improvements,” Datatec said. “The Group has increased its provision against trade receivables to reflect the weaker economic conditions in some markets.”