Amazon confounds expectations with third-quarter profit surge

Amazon Packaging

Amazon beat Wall Street expectations on Thursday, reporting a surprise profit, helped by rapid growth in its cloud computing business.

Shares in the online retailer spiked 10% in after-hours trading as investors reacted to news that the company had posted a $79m profit for the third quarter. Analysts had expected Amazon to post a loss.

The share surge added close to $5bn to Amazon founder Jeff Bezos’s fortune with the value of his 82.9m shares increasing $4.89bn.

Over the three months sales rose 23% to $25.4bn, up from $20.6bn last year. Analysts were expecting $24.9bn. Amazon Web Services (AWS) cloud computing unit, which rents out computing power to other companies, reported sales of $2.09bn, up from $1.17bn for the same quarter last year. The division made a profit of $521m. Amazon has said AWS could eventually be larger than its core retail business.

This was the second quarter in a row that Amazon surprised investors. In July the company also announced a profit when a loss had been expected. The news spurred another rally in Amazon’s share price and made it the most valuable retailer in the world, surpassing Walmart.

Over the third quarter Amazon introduced four new Fire tablet devices and held a one-day Prime Day sale, a promotion aimed at recruiting people for its $99-a-year Prime free shipping programme. On Tuesday the company announced it would be hiring 100,000 temporary staff to deal with the expected boost in activity over the holiday season.

This has been a big week for Amazon. On Monday the tech company fired back at the New York Times over an bruising investigation into its workplace culture. Amazon’s senior vice-president for global corporate affairs, Jay Carney, a former White House spokesman, accused the Times of failing to check its facts or verify their sources. The Times stood by its reporting calling it an “accurate portrait”.

Powered by Guardian.co.ukThis article was written by Dominic Rushe in New York, for theguardian.com on Thursday 22nd October 2015 22.09 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010