Amazon’s Jeff Bezos: Meet the man who made $9.5b in a matter of minutes

24 Jul 2015 | Author: | No comments yet »

Amazon is now worth $265B — $30B more than Walmart.

Amazon.com Inc shares surged more than 17 percent on Thursday as the online retailer posted an unexpected quarterly profit, pushing its market value above that of Wal-Mart Stores Inc, the world’s largest retailer.Shares of the Seattle-based e-commerce giant surged 17 percent after the markets closed, notching a new accomplishment for Amazon: It is the world’s most valuable retailer, at least for now, with a market value higher than Wal-Mart’s.

In a call with analysts, new Amazon CFO Brian Olsavsky said the company would continue to look for ways to keep costs in check while at the same time investing in “things that we think are big and important.” Amazon got a boost in revenue from Amazon Web Services, a suite of products and services offered to businesses by way of the “cloud,” or remote servers that enable users to access applications on any machine with an Internet connection. Combined with a bullish forecast for the third quarter, upbeat comments from company executives on Amazon’s Prime delivery service and rapid growth in its cloud computing service, Amazon delivered the kind of results Wall Street is looking for. Seattle-based Amazon, which last reported a profit in the 2014 fourth quarter, has often faced worries by investors that its heavy spending on new ventures will not actually pay off. “My quick take is that management has a lot of discretion over spending and appears to understand that investors prefer profits to losses,” said Michael Pachter, analyst at Wedbush Securities. “If they keep delivering profits, the stock should work.” Amazon’s shares had languished for much of last year as the company failed to deliver sustainable profits. Well-known for plowing its earnings back into the company, Amazon has been in the red three of the past five quarters, and Wall Street analysts, according to Reuters, expected another negative result Thursday. Prime, which for $99 a year also provides exclusive access to certain movies, music and Kindle books, is getting new subscribers at rates “higher than we’ve ever seen,” Chief Financial Officer Brian Olsavsky told analysts on a conference call.

The company won’t say how many Prime members it has, but it’s estimated to be as many as 40 million, and Prime members typically spend more than other shoppers. Membership was growing faster outside the United States than inside, helped in part by a recent one-day sale event called “Prime Day,” Amazon said.

It declined to disclose membership figures. “Growth has been fueled in large part by Prime growth and also (item) selection growth so it’s been a huge driver both in North America and international segments,” Olsavsky said in a separate call for reporters. In the three months ending June 30, Amazon’s net income was $92 million, or 19 cents per share, compared with a loss of $126 million, or 27 cents per share, a year earlier. The company says it plans to keep pushing that business, including growing it into India next year. “It looks like they beat across every major revenue line,” Colin Sebastian, an analyst at Robert W. Amazon declined to comment on rising competition from new online retailers like Jet.com, which offers annual memberships at half the price of Amazon Prime and promises savings on 10 million products.

Last month Facebook became more highly valued than the world’s largest retailer, knocking it out of the top 10 list of the highest-valued companies in the Standard & Poor’s 500 index.

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