Sign In  |  Register  |  About Burlingame  |  Contact Us

Burlingame, CA
September 01, 2020 10:18am
7-Day Forecast | Traffic
  • Search Hotels in Burlingame

  • ROOMS:

Amazon predicts higher holiday season sales, cloud stabilizing

Amazon's latest round of quarterly earnings came out Thursday, with the company telling investors that it saw $9.9 billion in net income in Q3. Inc on Thursday predicted a rise in holiday revenue that could still miss Wall Street expectations, buoyed by a recent marketing blitz, faster delivery and stabilizing outlook for its cloud division.

Amazon shares rose as much as 5% in after-hours trading before turning negative to slip 0.3%.

Facing an array of challenges to its business, Amazon is trying to keep its mantle as the world's biggest cloud provider and online retailer.

The company has sought to bolster its cloud, answering rivals Google and Microsoft with a deal to invest up to $4 billion in chatbot-maker Anthropic and touting an AI service drawing thousands of users.


"The retail giant's slowdown last year appears to be in the rearview mirror as it has embarked on significant cost-cutting throughout this year and sharpened its focus on key growth areas," Insider Intelligence analyst Zak Stambor said.

Amazon's fortunes are, in particular, tied to those of its cloud-computing division. Long a major source of profit, Amazon Web Services (AWS) saw growth slow down in earlier quarters while it is tackling significant costs to meet its AI goals.

Amazon is facing off against Microsoft, the second-largest cloud provider by revenue, which beat Wall Street estimates this week as its customers geared up for AI upgrades.

Andy Jassy, Amazon's chief executive, said in a statement: "Our AWS growth continued to stabilize."

Amazon's revenue in the third quarter rose 13% to $143.1 billion, beating Wall Street estimates of $141.41 billion, according to LSEG data. AWS brought in revenue of $23.1 billion, compared with analysts' expectations of $23.09 billion.

For the current holiday quarter, the company forecast revenue in the range of $160 billion and $167 billion. However, analysts polled by LSEG were expecting revenue of $166.62 billion, at the higher end of Amazon's guidance.

In retail, Amazon has reorganized its delivery network to locate goods closer to shoppers, letting it fulfill orders faster than before, and more cheaply.


Amazon's same-day delivery services is improving its margins by spurring shoppers to place more frequent and bigger orders. The retailer invested heavily in 2020 and 2021 to make the service available in more places.

"The retail division is sparking back into life, especially in North America," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

"There's been a significant increase in the number of seasonal workers Amazon's taken on in readiness for the Christmas rush, which bodes well for expectations around discretionary spending."

Sales in Amazon's North America segment increased 11% to nearly $88 billion, and the company reported a $4.3 billion operating profit in the business compared with an operating loss a year earlier.

Challenges to Amazon's business remain.

The U.S. Federal Trade Commission in September sued Amazon for allegedly inflating prices and wielding monopoly power, claims that Amazon has disputed. The company has said it will contest the lawsuit.

Household budgets have remained tight in the meantime, while cloud customers have undergone a months-long process of scrutinizing their spending.

Still, marketing events have helped prop up sales.

Amazon said a summer shopping blitz known as Prime Day notched its biggest sales day ever, while a follow-up promotion period was its largest October holiday kickoff to date.


Amazon has aimed to operate more leanly in light of recent economic uncertainty. After planning 27,000 layoffs, or what had been 9% of its roughly 300,000-person staff starting last year, it has since revealed more role reductions at Amazon Fresh stores, for instance.

Net income rose to $9.9 billion in the third quarter from $2.87 billion a year earlier.

Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Copyright © 2010-2020 & California Media Partners, LLC. All rights reserved.