Amazon, whose shares have dropped sharply in the past three months, announced rapidly growing earnings on Thursday amid a flurry of new initiatives.
The company said that its revenue rocketed 23% to $19.74bn in the first three months of this year, compared with $16.07bn at the same time a year ago, above analysts' expectations.
Amazon said that its net income was $108m, compared with $82m a year ago, but its operating income, a better measure of profitability, fell 19% to $146m from $181m at the same time last year.
The results are a much-needed positive sign for the company. Amazon's stock peaked at $408 in January, and has dropped 20% since then. While analysts such as Deutsche Bank's Ross Sandler rate the stock a "buy" on the assumption it will rise again, the drop already indicates that investors have temporarily lost some faith in the tech-and-retail company's future.
Amazon is in a rare position among tech giants. While Apple and Microsoft have been forced to justify where their future growth plans, Amazon has almost too many pots on the boil.
The company does not release sales figures for the Kindle – likely its most successful initiative. It recently launched Kindle Fire TV, a set-top box for TV viewing of content from streaming providers Netflix and HBO Go. Amazon also launched Amazon Pantry for non-bulk items and is also testing same-day delivery, according to the Wall Street Journal. An Amazon phone is said to be in the works.
But despite the speed of Amazon's new product launches, their likely success is not guaranteed. For the Fire TV, for instance, Amazon has included features such as a voice-operated remote control, a gaming system that requires a separate $39.99 controller, and integration with movie-information site IMDb. Nomura analysts were skeptical that the company would see much benefit in the end, considering how many competitors it has from services like Chromecast or Roku. "While the device itself adds few revolutionary features, we believe that at $99/unit, it is unlikely to be purchased by consumers who already own a streaming media device," they wrote.
Scrutiny is increasing around the company's strategy and its treatment of workers. The Huffington Post highlighted that some Amazon drivers are paid as little as $1.50 a package and have to pay for their own cars and gas. Earlier this year, Salon.com published a takedown comparing Amazon's worker policies to the much-maligned ones at Walmart.
One of the odder rumors generated by Amazon's investors includes the suggestion that the tech giant should buy beleaguered retailer Sears, which owns Kmart. The bizarre idea has been championed by analyst Robin Lewis.
The speculation around Sears, which has been picked up in the mainstream media, hinges on the theory that Amazon, which has spent around $20bn building distribution centers, will eventually want physical stores – of which Sears and Kmart have about 2,500. What the marriage push leaves out, however, is that Sears is struggling mightily, running at a loss of $1.4bn and dropping $14bn in combined profits since 2007, when it combined with Kmart. Its stock price has tanked to around $30, down from $192 a share seven years ago.
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