Published: Sat, February 03, 2018
Tech | By

AWS boosts Amazon's growth, accounts for 70% of its income

AWS boosts Amazon's growth, accounts for 70% of its income

"We want customers to be able to see new brands and have an easier time discovering products they're looking for", he said.

The world's largest online retailer said net income more than doubled to US$1.86 billion, or US$3.75 per share in the fourth quarter ended December 31 a year ago.

Analysts on average were expecting just US$1.85 per share, Thomson Reuters I/B/E/S said.

Shares of Amazon rallied to more than $1,000 per share following a positive earnings report during the third quarter from the company. And for the full year, net sales increased 31% to $177.9 billion, compared with $136.0 billion in 2016.

The growth was even more impressive considering Amazon set aside $789 million to cover taxes on repatriated earnings, taking advantage of a favourable rate under a new law passed by Congress. Amazon has also inked deals with several appliance manufacturers and even vehicle companies to feature Alexa integrations in their products.

Apart from the cloud unit, Amazon generated revenue from e-commerce, and its television network, Amazon Prime Video.

However, operating income slipped by two per cent to $4.1 billion (£2.9 billion), compared with operating income of $4.2 billion recorded for 2016. The stock has soared 26% over the past three months through Thursday's close, while the S&P 500 has gained 9.4%. AWS accelerated its pace of innovation, releasing around 500 new services and features during the fourth quarter. But the fourth quarter of 2017 was not directly comparable as it includes a provisional tax benefit for the impact of recently introduced US tax cuts at around $789 million.

Amazon said it expects operating profit in the current quarter of between $300 million and $1 billion. Net income for Amazon was $3bn compared with $2.4bn for 2016 and operating income for 2017 landed at $4.1bn.

Amazon on Thursday reported the highest quarterly profits in company history, bolstered by strong holiday sales and growing demand for its cloud business.

Loss from the global business widened to $3 billion in 2017 from $1.3 billion the previous year, the company said in a statement.

Bezos noted that the Alexa Skills store offers more than 30,000 skills, including tools for gamers, and that customers can use Alexa to control more than 4,000 smart home devices. The company said it will continue the global expansion of the Amazon Fresh grocery delivery service and Prime Now, a one-hour delivery service, to strengthen Prime membership overseas. It grew faster than revenue, reflecting Amazon's expanding operating margin, which is driven by increased operational efficiencies. Additionally, we believe Alexa technology (which continues to be integrated across a wide number of smart home and other technology-enabled devices) and new retail formats will join the list of monetization opportunities in the years to come.

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