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April 25, 2014

Good News for Amazon on Quarterly Earnings


With some quarterly earnings reports coming out, it's often a nail-biter of a time for investors and employees alike. Companies begin to consider how sales went against how sales should have went, if there's a way to make changes, if even layoffs become necessary, or if times are starting to look brighter. At Amazon, there's likely a collective relief and happiness; reports suggest that the company's numbers have not only met some expectations, but exceeded others.

The reports note that, in the first quarter of 2014, Amazon brought in $19.74 billion in total revenue. That's a great number in isolation, but it's even better when matched against the same time the previous year, as the first quarter of 2013 saw $16.1 billion in total revenue. Thomson Reuters put up expectations of $19.4 billion in revenue, which was a great stroke for Amazon. Meanwhile, the company also met expectations on per-share earnings, which turned in 23 cents per share, a number that was up fully 27 percent over the same time the previous year.

What's bolstering those numbers? It's been a big first quarter for Amazon, coming off the holiday shopping season with a new product in the Fire TV box, as well as a set of new features in Amazon Web Services, already a pretty major property by itself. A more recent development may put some help into the second quarter's numbers, as Amazon recently set up an arrangement with HBO to bring some of HBO's older series to the fore, including major properties like “The Wire” and “The Sopranos.” Despite this, however, the second quarter of 2014 may not be a good one for Amazon, as the company expects an operating loss on the second quarter between $55 and $455 million.

Amazon has never been afraid to experiment and try to put new things into play. We've all heard about Amazon Prime Air, a hypothetical as yet—the FAA has yet to sign off on commercial use of drones—delivery service for smaller items brought in by small drone aircraft. This can in turn lead to losses, and it can also lead to some impressive new products coming out. The company certainly has plenty of advantages in its ability to stock a wide variety of items, make said items easily accessible to potential customers, and then get the items to those customers quickly.

While there are clear challenges to the company's future earnings—not least of which the recent moves to tax Amazon sales on the parts of several states—the company is extremely well-diversified and not afraid of experimentation, giving it a good long-term picture. With Amazon's biggest sales period still ahead—the holiday shopping season—a positive end-of-year report is entirely possible given the first half thus far. The news of a potential new Amazon smartphone, complete with the possibility of tilt-based controls, may help bolster the rest of the year for Amazon even farther if said phone makes an appearance, and development costs on a new phone may be what's contributing to the reports of losses in the second quarter.

Only time will tell, naturally, how it all comes out in the end, but in the short term—even with losses on the horizon—things are looking pretty good for Amazon, a store that's coming to mean a lot of different things for a lot of different shoppers.




Edited by Alisen Downey


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