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Amazon's shares up by 18% after reporting surprise Q2 profit

Amazon reported second quarter sales of $23.18bn, up by 20% compared with the previous year and well ahead of analysts’ predictions

Amazon’s share price shot up by 18% after reporting a surprise $92m profit for the second quarter of 2015, in stark contrast with analysts’ predictions and the $126m loss in the same quarter a year ago.

The online retailer said net sales increased by 20% to $23.18bn, well ahead of analysts’ predictions of a 16% increase to $22.4bn.

Amazon said the revenue increase would have been 27% compared with the previous year, had it not been for the $1.39bn unfavourable impact from year-over-year changes in foreign exchange rates.

Operating income was $464m, compared with operating loss of $15m in second quarter 2014.

“The teams at Amazon have been working hard for customers,” said Amazon.com founder and chief executive Jeff Bezos.

He said highlights of the year so far included the opening of Amazon Mexico, the launch of Amazon Prime free same-day delivery, the launch of 350 “significant” Amazon Web Services (AWS) features and services, and the signing of agreements for new solar and wind farms that will ensure Amazon exceeds its 2016 goal of 40% renewable energy.

Amazon did not reveal which products were responsible for the second quarter’s success, but one of the biggest contributors was AWS, with sales growing by 81% to $1.8bn, and profit up by 408% to $391m.

Amazon also offered a better-than-expected outlook for the current quarter, predicting revenues in the range of $23.3bn to $25.5bn.

Despite the financial success of the second quarter, Amazon could soon face an investigation of its power in the book market, reports The Guardian.

The company recently told authors whose works is available through Kindle Owners Lending Library that they will no longer be paid $1.30 per download, but at a rate of $0.006 per page read.

This means that only authors whose books are 220 pages long or longer and are read from cover to cover will make the same or more in future.

Two weeks later, top authors including Malcolm Gladwell, Ursula Le Guin, Michael Chabon and Ann Patchett sent a letter to the US Department of Justice attacking Amazon’s “abuse of its dominance in the world of books” and calling for an investigation into its “power over the book market”.

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I am quite surprised at how gullible investors can be. One of the most heavily capitalized companies in the world makes a paltry ~480 million profit and people are lining up like cattle to buy their stock. It makes me laugh
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