Cloud Business Pushes Amazon To Record Profit — WSJ

April 29, 2016 - Kindle Unlimited

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By Greg Bensinger

Amazon.com Inc. on Thursday delivered a many essential entertain ever, commanding final year’s record holiday period,
thanks to surging sales from a remunerative cloud-computing business.

Despite a determined repute as a distinction miser, Amazon incited in a fourth true moneymaking entertain and
expanded margins in a core sell business, as good as a Amazon Web Services multiplication that rents computing energy to
other companies.

Superlatives abound: Its 28% sales expansion was a top given a second entertain of 2012, while a operating
margin of 3.7% was a best in some-more than 5 years.

The money cow pushing these total is AWS, a decade-old operation that pioneered a business of hosting computer
servers for companies like Netflix Inc. and a Central Intelligence Agency. AWS has turn a go-to provider for a
generation of startups, supervision agencies and other companies seeking to offload computing energy to Amazon’s
thousands of servers.

The cloud division’s sales rose 64% to $2.57 billion. While that is reduction than one-tenth of Amazon’s overall
revenue, AWS generated about 67% of a company’s handling income in a quarter.

In other words, AWS is ancillary Amazon’s sprawling, 20-year-old business that spends billions of dollars in an
effort to invert normal brick-and-mortar sell by providing business scarcely all possible in as fast as
one hour.

Chief Executive Jeff Bezos has pronounced he expects AWS to strech $10 billion in sales this year, even as Microsoft
Corp., Alphabet Inc. and others ramp adult pressure. AWS’s handling domain was 28%.

“AWS is carrying a iPhone moment,” pronounced Colin Gillis, a BGC Partners analyst. “Adoption is spreading, domain is
expanding.”

Still, Amazon Chief Financial Officer Brian Olsavsky cautioned analysts not to design identical large formula for AWS
in a entrance years. “It is really early to start sketch too many conclusions on a long-term margins in this business,”
he pronounced on a discussion call with analysts. “They’ll be rough over time.”

Beyond AWS, a association is also pulling in constant consumers to a sell operation with a Prime unlimited
shipping and streaming video service, and a guarantee of ever-faster smoothness in a largest U.S. markets.

Amazon continues to build new warehouses and streamline shipping and logistics operations, including creation some-more of
its possess deliveries by lorry and craft as it hurdles carriers like United Parcel Service Inc.

Amazon still spends heavily to boat a register to customers. Shipping costs rose a high 42% to $3.28 billion in
the quarter, giving some-more reason for Amazon to find ways to enclose costs by land, sea and air.

Amazon has struck a understanding to franchise 20 planes to convey sell around a U.S. in new months, installed
robotic assistants in a warehouses, non-stop scads of new storage comforts closer to civic centers and begun
delivering some-more of a possess packages to patron doorsteps.

Amazon also is operative to move in new members to a $99-a-year Prime use with exclusive radio content
and monthly-plan offers expelled only progressing in April.

Mr. Olsavsky pronounced he approaching to “significantly boost a calm spend” by a rest of a year.

The association has won vicious commend for a “Transparent” streaming radio array and is building a show
with Woody Allen, as good as cinema for recover in cinemas.

Amazon increasing a spending on record and calm by 28% to $3.56 billion, incomparable than a 25% altogether growth
in handling expenses, that totaled $28.06 billion.

Some of those costs went to spending on product development, including for new inclination like a Echo Dot and Tap
virtual partner speakers. It also recently expelled a new Kindle e-reader device, that helps feed a e-books
business.

Amazon reported a distinction of $513 million, or $1.07 a share, reversing a year-ago detriment of $57 million, or 12 cents
per share, and commanding a $482 million warranted in a fourth quarter. Analysts were awaiting a distinction of 58 cents,
according to a normal guess gathered by Thomson Reuters.

Sales of $29.13 billion, adult 28% from a year ago, surpassed Amazon’s possess foresee of $26.5 billion to $29 billion
and analysts’ expectations of $27.98 billion.

For a stream quarter, Amazon expects sales between $28 billion and $30.5 billion, suggesting expansion trimming from
21% to 32% from a year ago.

Analysts, on average, were awaiting sales of $28.33 billion, according to Thomson Reuters.

Write to Greg Bensinger during greg.bensinger@wsj.com


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