The moneymaking machines at the core of Amazon.com Inc, Microsoft Corp and Alphabet Inc, the parent company of Google, are notably different, but the respective kings of online retailing, software and Internet search should all credit a relatively new line of business for lifting their financial results.
In their quarterly earnings reports released on Thursday, the three said cloud computing — through which they rent computing services and online access to software hosted in their data centers — was growing faster than their larger, older businesses.
The impact of cloud computing was particularly noticeable at Amazon, the leader in this still-young business. The profit Amazon could make on cloud-computing services is significantly bigger than in its retail sales, and that has helped turn the Seattle company from a consistent money-loser to a respectable moneymaker.
For the first quarter, which ended on March 31, Amazon said its total net income rose to US$724 million, or US$1.48 a share, from US$513 million, or US$1.07 a share, a year ago.
The company said the US$890 million in operating income from its cloud business, called Amazon Web Services (AWS), accounted for most of its overall profits.
However, the worry is that this cannot last forever, not with Microsoft and Google making big investments in their own cloud businesses while trying to undercut Amazon with lower prices.
That has not happened — at least not yet. While AWS revenue grew at a slower pace than in the past, it still rose a healthy 43 percent to US$3.66 billion.
Overall revenue at Amazon rose 23 percent to US$35.71 billion from US$29.13 billion in the same period a year ago.
The company’s results were well ahead of the US$1.12-a-share average earnings estimate and US$35.3 billion revenue estimate of analysts compiled by Thomson Reuters.
“There’s always this moment when people think: ‘Is the magic going to run out?’” Forrester Research analyst James McQuivey said. “It just hasn’t panned out.”
Microsoft — the No. 2 player in cloud computing — is steadily making the transition to that business, relying less on PC software, the company’s mainstay for decades.
Microsoft’s Azure cloud hosting business grew by 93 percent from a year earlier, and the cloud version of its productivity software Office 365 — sold to companies as an online service — grew by 45 percent.
“We’re seeing continued strong demand for our commercial cloud-based services,” Microsoft chief financial officer Amy Hood said in an interview.
Microsoft’s overall revenue rose 8 percent in the quarter, to US$22.09 billion. That was enhanced by US$975 million in revenue from LinkedIn, the professional networking site that Microsoft bought for US$26 billion in a deal that closed in December last year.
Net income rose 28 percent to US$4.80 billion. Its operating earnings per share, which excludes one-time gains, increased 16 percent to US$0.73 a share, ahead of the average analyst estimate of US$0.70 a share.
For Alphabet, cloud efforts are catching on, although it trails far behind Amazon and Microsoft. Alphabet does not break out cloud revenues, but its “Google other revenues” segment, which includes the cloud, jumped 49 percent from the first quarter of last year.
Alphabet chief financial officer Ruth Porat said in a conference call with analysts that the Google cloud platform was one of the company’s “fastest-growing businesses,” although she offered no details.
Nearly all of Alphabet’s business comes from advertising on Google sites and services, which is still expanding despite tough competition from Facebook Inc.
First-quarter earnings increased to US$7.73 a share while revenue jumped 22 percent to US$24.75 billion. Average estimates from Thomson Reuters had been for US$7.39 a share in earnings with revenue of US$24.19 billion.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the