Amazon (NASDAQ: AMZN) is expected to have a huge holiday quarter. However, based on recent history, including the holiday quarter from a year ago, the company could lose money at its industry leading e-commerce business. A positive net income for the fourth quarter 2017 may rely on its Amazon Web Services industry leading cloud business.
In the fourth quarter of 2016, Amazon had total revenue of $43.7 billion. Net income was a tiny $475 million. Amazon’s North American division had operating profits of $816 million on $26.3 billion in revenue. Amazon’s International results was an operating loss of $487 million on $14 billion in sales. In other words, between the two, Amazon’s e-commerce business had operating income of $329 million, a remarkably small margin.
Amazon Web Services produced almost all of the operating income in the fourth quarter of 2016. The figure was $926 million on revenue of $3.5 billion
In its third quarter 2017 results, Amazon issued guidance which showed that its e-commerce operations could indeed lose money in Q4. Management said revenue for the fourth quarter would be between $56 billion and $60.5 billion. Operating income was forecast to be between $300 million and $1.65 billion. At the lower end of the operating income forecast, Amazon’s e-commerce business will almost certainly lose money, and AWS’s operating income will be necessary to drive a positive bottom line for the company as a whole
CEO and founder Jeff Bezos has once again convinced Wall St. that strong earnings are not necessary for Amazon to be a success. At is takes a larger and larger piece of total retain sales, particularly in North America, huge profits will eventually be the results. However, as revenue rises rapidly, there is still no evidence of that.
The evidence is that Bezos continues to be convincing has show up in Amazon’s share price once again. Its stock is up 55% this year to $1,169. Its market cap is $563 billion. Only Microsoft (NASDAQ: MSFT) at $660 billion and Apple (NASDAQ: AAPL) at $869 billion, are ahead of it.
Amazon’s e-commerce business may not post positive operating income in the fourth quarter, and once again Wall St may not care.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
