Amazon Reports Mixed Q4 Results and Cautions on Consumer Spending Amid Global Events

Amazon cautions: No matter what you are selling, when such events happen people shop less - Times of India

Amazon reported a surge in quarterly profits on Thursday, August 1, surpassing analyst expectations. However, the e-commerce giant fell short of revenue estimates, sending its stock plummeting in after-hours trading. Despite earning $13.5 billion in the April-June period, a significant increase from the previous year's $6.7 billion, investors were disappointed by Amazon's revenue forecast for the upcoming quarter.The company projected sales between $154 billion and $158.5 billion, below analyst predictions of $158.22 billion. Chaotic summer of news has distracted consumers Amazon attributed the lower-than-expected revenue guidance to a distracted consumer base. The company argued that newsworthy events, such as political unrest and the Olympics, had diverted consumer attention away from shopping. This, in turn, impacted purchasing decisions and overall sales. "When high profile things happen, or the assassination attempt a couple weeks ago, you're seeing that people shift their attention to news," Brian Olsavsky, Amazon's finance chief, said on a call with reporters, adding, "This is going to be a tough quarter to forecast." Olsavsky said consumers were favoring lower-cost products and those that arrive quickly. But when customers are distracted by the news, they sometimes skip purchases entirely. "No matter what you're selling or providing to a customer base, customers only have so much attention and the things like the Olympics, although they don't happen that often, we do see different traffic patterns around those events," Olsavsky said. "When high-profile things happen or the assassination attempt a couple of weeks ago, you see that people shift their attention around the news." Amazon CEO Andy Jassy too echoed a similar view, he said on a post-earnings call that customers were trading down on price when they could. Amazon's cloud profit shines While the company's cloud computing division, Amazon Web Services (AWS), continued to perform strongly, with revenue rising 19% to $26.3 billion, it was not enough to offset the broader revenue shortfall. AWS' strong performance comes just days after Microsoft's cloud division Azure fell short of market estimates and sparked more concerns around Big Tech's hefty AI spend. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.

Amazon reports boost in quarterly profits but misses revenue estimates - Times of India

Amazon's quarterly profits has surged, but the company's revenue fell short of analysts' expectations. For the April-June period, Amazon reported earnings of $13.5 billion, exceeding the $10.99 billion anticipated by industry analysts surveyed by FactSet. This marks an increase from the $6.7 billion earned during the same period last year. Earnings per share for the second quarter were $1.26, surpassing analysts' expectations of $1.03. Despite the positive earnings, investors reacted negatively to other results, leading to a more than 6% drop in Amazon shares after the closing bell.The company's revenue of $148 billion, a 10% increase, slightly missed analyst expectations of $148.67 billion. Amazon also provided a lower-than-expected revenue forecast for the current quarter, ending Sept. 30, ranging from $154 billion to $158.5 billion, compared to the $158.22 billion predicted by analysts. During the Covid-19 pandemic, Amazon increased its spending to meet the higher demand from consumers who relied more on online shopping. However, as demand cooled and other parts of its business faced economic pressures, the company implemented aggressive cost-cutting measures, including eliminating unprofitable businesses and laying off more than 27,000 corporate employees. These cost-cutting efforts have contributed to the growth in profits. Amazon is also benefiting from the excitement surrounding generative artificial intelligence, which has helped revitalize its cloud computing unit, Amazon Web Services (AWS), after experiencing a slowdown. The company reported a 19% increase in revenue for AWS compared to the same period last year. "We're continuing to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration in AWS growth," said Amazon CEO Andy Jassy in a statement. However, Amazon is expected to increase its spending this year to support AWS. Chief Financial Officer Brian Olsavsky stated that the company spent more than $30 billion on capital expenditures during the first half of the year, primarily to enhance infrastructure for AWS, and anticipates further increases in the second half. Like other tech companies, Amazon is investing in data centers, chips, and power infrastructure to support AI workloads. Meanwhile, Amazon's core e-commerce business experienced a more modest 5% revenue growth, excluding sales from its annual Prime Day discount event. Olsavsky attributed the slower growth in North America to customers being cautious with their spending and opting for cheaper items. The company's advertising business, primarily consisting of ad listings on its online platform, saw a 20% jump in sales. Amazon recently began placing ads on movies and TV shows on its Prime Video service to generate additional revenue. Prime Video also secured an 11-year media rights deal with the National Basketball Association, alongside two other companies. Despite these developments, Amazon faces challenges, including a recall of more than 400,000 hazardous products sold by third-party sellers on its platform and an antitrust lawsuit alleging overcharging of sellers and stifling competition. Amazon's results followed earnings reports from other tech giants such as Microsoft, Meta, and Alphabet Inc, the parent company of Google. (With inputs from agencies) The TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.