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.
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.