On cloud nine: Amazon shares surge on strong earnings as cloud services boost profit

 
Rebecca Smith
Amazon Holds News Conference
Jeff Bezos' firm closed a deal to buy Whole Foods earlier this year (Source: Getty)

Amazon shares rose more than seven per cent in after-hours trading, after the tech giant announced better than expected earnings and sales up by a third.

Read more: Banks should be worried about Amazon rather than fintech, says McKinsey

The figures

Amazon beat expectations with a 34 per cent rise in sales to $43.7bn for its third quarter ended 30 September, compared with $32.7bn for the same period last year.

Net income topped analyst expectations, edging up from $252m to $256m, or $0.52 per diluted share, when analysts were forecasting just three cents.

Operating income was down 40 per cent to $347m, compared with the $575m reported for the same time last year, as the firm wheeled out investment plans, including expanding delivery services.

Its cloud computing business, Amazon Web Services, recorded sales rising 42 per cent, topping the $1bn mark for operating profit.

Why it's interesting

All eyes were back on Amazon earlier this year, with the announcement it was buying Whole Foods for the princely sum of $13.7bn (£10.7bn) in August.

And its sales were given a healthy boost to the tune of $1.3bn thanks to the acquisition. Excluding Whole Foods, and the $124m favourable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales rose 29 per cent compared to the same time last year.

It's all looking pretty rosy for Amazon's boss Jeff Bezos. And according to the Harvard Business Review, which announced the best performing chief executives in the world earlier this week, the Amazon founder would top the rankings if they were based solely on financial performance.

Bezos topped the list in 2014, and has been the best financial performer in every subsequent year.

Looking ahead, Amazon said net sales for the all important holiday quarter are expected to be between $56bn and $60.5bn, growing 28-38 per cent compared with the fourth quarter last year.

The tech giant also gave a rather wide forecast for operating income, saying that is expected to be between $300m and $1.65bn.

What the company said:

Amazon boss Jeff Bezos, cited the success of the firm's voice-activated device Alexa.

He said:

In the last month alone, we’ve launched five new Alexa-enabled devices, introduced Alexa in India, announced integration with BMW, surpassed 25,000 skills, integrated Alexa with Sonos speakers, taught Alexa to distinguish between two voices, and more.

He added that "active customers are up more than five times since the same time last year".

Read more: Ranked: The world's best performing chief executives 2017

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