Amazon.com said on Thursday that it swung to a profit in the second quarter, but its shares dropped sharply in after-hours trading because the results missed analysts' expectations.
The company reported net income of US$76.5 million, or US$0.18 a share, missing analysts' forecasts of US$0.19. That is in contrast to a loss of US$43.3 million, or US$0.11 a share, in the period a year earlier.
Revenue rose 26 percent, to US$1.39 billion in the quarter, the company's fourth consecutive profitable one.
Company executives attributed the swing to profitability to a sharp rise in international sales and to its strategy of low prices and free shipping.
Sales outside the US rose 50 percent, to US$595 million, while domestic sales increased 13 percent, to US$792 million. Excluding a US$47 million benefit from changes in foreign exchange rates, net sales grew 22 percent during the quarter.
The executives said Amazon's offer of free shipping was increasing sales worldwide and that it planned to continue the program indefinitely. Jeffrey Bezos, Amazon's chief executive, has long contended that a strategy of lower prices would ultimately lead to greater profitability.
"While free shipping is expensive for the company, it saves our customers tens of millions of dollars each quarter, and we plan to keep it in place indefinitely," Bezos said.
Tom Szkutak, the chief financial officer, said the company planned to continue lowering its prices through the end of the year.
"We intend to further lower customer prices in the second half of this year and thereafter," he said. "Our goal is to maximize gross profit dollars, not percentages, ultimately maximizing free cash flow and free cash flow per share for shareholders."
Bezos also said the company planned to increase its hiring during the third quarter, including the opening of a new fulfillment center in Scotland.
Looking ahead, the company raised its forecast for the third quarter, estimating revenue of US$1.4 billion to US$1.5 billion, an increase of 26 percent to 34 percent compared with sales in the period a year earlier. The company expects net sales for the year to be US$6.6 billion to US$6.9 billion.
"I think Amazon still has a solid model and a good business, but growth is clearly slowing down and spending is increasing," said Safa Rashtchy, an analyst at Piper Jaffray.
"The growth from here is going to be more difficult and they have to spend to get there," Raschtchy said.
During the quarter, Amazon continued to add new product lines, including a beauty supply store and a jewelry store.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source