Weak Amazon, Alphabet results ignite growth worries

Weak Amazon, Alphabet results ignite growth worries

Weak Amazon, Alphabet results ignite growth worries

In its third quarterly earnings report, Amazon reported that net sales in the past three months have totaled $56.6 billion, which is a 30 percent year-over-year increase.

Amazon.com issued a disappointing revenue and profit forecast for the busy Christmas quarter, suggesting sales growth is slowing for the e-commerce giant while higher pay for warehouse workers could hurt its profits.

But its revenue grew less than Wall Street analysts expected, and Amazon's shares fell after the results were released. The company's burgeoning advertising business continued to show strength, with sales more than doubling in the quarter. "Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries", Bezos said in a statement.

The company posted third-quarter earnings per share of $5.75 on net income of $2.9 billion, topping expected earnings per share of $3.14, according to Refinitiv data.

Amazon on Thursday reported third-quarter earnings that were more than $2 a share better than analysts had forecast.

The world's No.1 cloud business by revenue saw sales up 45.7 percent to $6.68 billion, narrowly edging past estimates of $6.67 billion. It purchased online pharmacy PillPack in June, which followed its US$13.7 billion acquisition of Whole Foods past year to jump start its grocery business.

"Shares are up 52% YTD, hence this kind of "growth scare" is likely to weigh on sentiment in the near term, but ultimately will work itself out (likely by 1Q19)", Barclays analyst Ross Sandler wrote in a client note.

Olsavsky, the CFO, also said the company is operating more efficiently, hiring less than in the past and adding less warehousing space. A big reason behind that was the absorption of Whole Foods Market and the 87,000 people who work there.

Against Amazon's $10bn, Google owner Alphabet alone generated ad revenues of $28.95bn in the third quarter - equivalent to a 20.3% increase from previous year. It was the second consecutive quarter that sales fell short of estimates and the first time for the back-to-back revenue miss in nearly four years. In its "other" category, which is mostly made up of its growing advertising business, revenue more than doubled to $2.5 billion.

The company, which now operates on a global level, also launched its Amazon Prime paid subscription service in 2005 and has experimented with brick-and-mortar retail in recent years, establishing Amazon Go grocery stores in Seattle and Chicago starting in December 2016 and its Amazon 4-Star retail center for highly-rated products in New York City in January 2018.

Amazon's stock closed regular trading up $117.97 a share, or 7.1%, to $1,782.17.

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