Amazon Web Services is now a $17.5 billion business

03 February, 2018, 09:22 | Author: Celia Hoffman
  • Amazon reports record profits

For the fourth quarter Amazon posted a net profit of $1.8bn (£1.3bn) compared to $749m (£526m) in the same year-ago period.

On a consolidated basis (including global, North America and Amazon Web Services), Amazon registered profits at almost Dollars 2 billion in the said quarter compared to USD 749 million in the year-ago period.

Amazon's overall operating income in 2017 was down 2 percent to $4.1 billion as compared to $4.2 billion year over year. For the full year, net income was $3.0 billion, or $6.15 per diluted share, compared with net income of $2.4 billion, or $4.90 per diluted share, in 2016.

That figure includes a $789m, or $1.59 per share, penalty as a result of the US Tax Cuts and Jobs Act of 2017: the biz has a lot of dosh offshore, and this law allows it to bring that money back to America with a reduced levy on the overseas profit.

In the fourth quarter 2017, AWS had $5.11 billion in sales, which was 17% rise from the same quarter in 2016. Operating income rose 46% to $1.4 billion, very close to Amazon's North American bottom line, but on only 14% of North American revenue. Founder and CEO Jeff Bezos introduces product after product to drive new sales and customer loyalty. Customers can use Alexa to control more than 4,000 smart home devices from 1,200 different brands. Amazon.com, Inc. (AMZN) also said its Fire TV Stock and Echo Dot were 2017's best-selling products across its whole site, and buyers purchased "tens of millions of Echo devices" during the year.

Sales of its Amazon Web Services business are also up at $5.1 billion, slightly beating one analyst's estimate of $5 billion, but Amazon singled out one thing that was truly remarkable: its popular and market-leading Alexa assistant.

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The worldwide operations saw an operating loss of $919 million on revenues of $18 billion.

"While profitability is taking a step back, we believe Amazon is once again investing ahead of growth in commerce and voice search", Mizuho said in a note, quoted by CNBC.

"We've reached an important point where other companies and developers are accelerating adoption of Alexa", Bezos said.

Amazon has bulldozed into the food industry with its Whole Foods acquisition, built up a large cloud computing business and expanded its physical footprint with bookstores and a new automated convenience store.

"There's certainly constant cost reduction and productivity efforts underway in many areas of the company, but specifically in our warehouses", the paper cited Brian Olsavsky, Amazon's chief financial officer, as saying. Alphabet's Larry Page and Sergey Brin lost as much as $3 billion apiece as fourth-quarter earnings missed views.

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