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Amazon has another 'Prime' holiday: Profit tops $3 billion

NEW YORK (AP) — Amazon had another strong holiday season: Its quarterly profit topped $3 billion for the first time as revenue grew across many of its businesses, including online shopping, advertising and cloud computing.

The company, however, issued an estimate for the current quarter's revenue that was below what Wall Street analysts expected, sending its stock down about 5 percent in after-hours trading Thursday. Amazon executives attributed the softness in this quarter to uncertainty about how new e-commerce rules in India could hurt sales in that country. They also said the company's costs may increase this year from last year, as it spends on hiring, warehouse construction and other investments.

Amazon, which recently surpassed Microsoft as the most valuable company in the U.S., reported net income of $3.03 billion during the last three months of 2018. On a per share basis, it had earnings of $6.04, beating the $5.55 per share analysts expected, according to Zacks Investment Research.

Revenue rose 20 percent to $72.38 billion, which also beat expectations. The Seattle-based company has boosted its profits in recent quarters as it expanded into businesses beyond online shopping. Its Amazon Web Services unit, which provides cloud computing services to governments and companies, has become a big moneymaker, helping to offset the high costs of the retail business. Sales in the web services unit grew 45 percent in the quarter.

Its advertising division is now a multi-billion dollar business, selling ads to companies that want their products to show up first when shoppers search for things on the site. The company doesn't say exactly how much its ad business makes, but its "other" revenue, which is mostly made up of the ad business, nearly doubled from a year ago.

During the holidays, Amazon said a record number of people signed up for its Prime membership, but it didn't provide specific numbers. Prime members pay $119 a year for free, fast shipping and other perks. The service is a way for the company to strengthen loyalty with shoppers.

Amazon said that its voice-activated device, the Echo Dot, was its best-selling product, but didn't say how many of the hockey-puck shaped gadgets featuring its Alexa voice assistant it sold. "Alexa was very busy during her holiday season," said CEO and founder Jeff Bezos, in a statement Thursday.

Amazon has been making a big push into brick-and-mortar stores, buying up the Whole Foods grocery chain and opening bookstores and cashier-less convenience stores around the country. But sales at its physical stores slipped 3 percent from a year ago.

It said those numbers didn't include Whole Foods groceries that were bought online, and it noted sales were lower this year because it had five extra days of revenue in the quarter a year ago, due to an adjustment it made when it bought Whole Foods. If adjusted, the company said Whole Foods sales would be up about 6 percent.

Contact Joseph Pisani at http://twitter.com/josephpisani

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