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Amazon Profits Dive As Company Expands

David Gilbert


Amazon Profits Dive As Company Expands

Amazon has announced its earnings for the first quarter of 2011 and despite better-than-expected revenue, profits tumbled by $100 million year-on-year.

Jeff Bezos, founder and CEO of Amazon last night announced that the company’s profits took a larger than expected hit but that he wasn’t worried as he is willing to forego short-term earnings for long term opportunities. Amazon’s profits tumbled to ‘just’ $201 million, or 44 cents a share, down from $299 million, or 66 cents a share for the same period last year. These results were lower than Wall Street expectations of 61 cents a share and as a result Amazon’s share price fell in after hours trading last night. However there was also good news for Amazon as it reported revenues of $9.86 billion, which was up 38 percent on last year and ahead of financial experts predictions.

The “long-term opportunities” Bezos spoke of include the company’s move further into the cloud, new Amazon products and services including new services for the Kindle, and online video services (LoveFilm). Highlighting this fact was an increase of 41 percent of operating expenses in the period and the addition of 4,200 new employees. In fact since this time last year, Amazon’s workforce has risen from 26,100 to 37,900. So why the 45 percent increase in employees? Well Amazon has been pretty busy recently announcing its Cloud Drive online music streaming service, a new ad-supported Kindle and its very own Android app store in recent weeks. Add to that reports that it is readying an Android tablet and possibly getting into the NFC mobile payment market and things are definitely not boring for Bezos and Co.

As Amazon has grown in recent years, it has gone from competing with the likes of Barnes and Noble to competing with the likes of Apple, Google and Microsoft, all of whom have deeper pockets. However with Bezos’ vision and his willingness to invest in the future, Amazon could grow ever larger and in areas it previously would have only dreamed of.

Source: Amazon

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