Amazon.com Inc surprised the market on Thursday with a quarterly profit far better than anticipated for the online giant known for pouring money into projects such as original video programs and delivery drones.
“Amazon beat estimates even though Jeff Bezos is moving at a paranoid pace; pretty much spending money as fast as it comes in and going flat out as if there were somebody right on his heels chasing him,” said Rob Enderle, an independent analyst at the Enderle Group in Silicon Valley.
“When a competitor does emerge, they won’t have a chance of catching him. It’s the most aggressive growth strategy for such a long period of time that I have ever seen,” he said.
Amazon posted earnings of US$214 million for the fourth quarter of last year, as sales jumped 15 percent to US$29.3 billion, swinging to profit after two consecutive losing quarters.
For last year as a whole, Amazon posted a net loss of US$241 million on sales of US$89 billion.
Amazon has faced pressure from shareholders to deliver profits, even as founder Jeff Bezos has invested in a vast array of projects — from online video to its own smartphones and delivery drones to business e-mail.
“I see Amazon creating lots of experiments to change from being a giant Web mall to being a much more diverse company,” Forrester analyst Frank Gillett said.
Bezos said the company is reaping benefits from Amazon Prime, an online subscription service.
Last year, the price was raised to US$99 annually for US customers and membership grew 53 percent, according to Amazon.
“Prime is a one-of-a-kind, all-you-can-eat, physical-digital hybrid — in 2014 alone we paid billions of dollars for Prime shipping and invested US$1.3 billion in Prime Instant Video,” Bezos said.
A Prime subscription gives members unlimited video and music streaming and, in some locations, offers same-day delivery on groceries.
Amazon managed the profit even as it ramped up its video offerings to compete against Netflix Inc and others.
At the same time, Amazon has been working to boost sales from its traditional online marketplace and a large cloud services operation for businesses.
Amazon this week announced plans to offer a cloud-based e-mail and calendar service to directly compete with Microsoft Corp’s Outlook and others.
In contrast, Amazon pulled its private-label Elements premium diapers from its virtual shelves last week, after telling shoppers it wants to make design improvements.
Amazon took on the giants of the diaper industry early last month with a competitively priced product pitched at environmentally conscious buyers.
However, the company removed the diapers from its virtual shelves due to quality concerns. An Amazon Fire smartphone launched last year flopped.
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