Amazon jumps more than 3 percent after earnings

Published 47 Mins Ago

Amazon reported strong fourth quarter earnings on Thursday, pushing its stock up more than 3 percent in after hours trading.

Here are the most important numbers Wall Street will be watching:

• Revenue: $60.5 billion vs. $59.83 billion, as estimated, according to Thomson Reuters
• EPS: $3.75 per share vs. $1.85 per share, as estimated, according to Thomson Reuters
• AWS revenue: $5.11 billion vs. $4.97 billion, as estimated, according to FactSet

Amazon's revenue, which includes sales from Whole Foods, jumped 38 percent year-over-year. Net income was $1.9 billion, or $3.75 per share, more than doubling from the same period of last year.

For the full year, Amazon had $177.9 billion in sales, up 31 percent from the previous year's $136 billion. Despite the huge growth in revenue, Amazon's operating profit dropped 2 percent to $4.1 billion.

In a statement, Amazon CEO Jeff Bezos touted the success of Amazon's voice-controlled device Alexa and hinted that the company would invest more in the space.

"Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don't see positive surprises of this magnitude very often — expect us to double down," Bezos said.

Amazon's cloud unit, AWS, continued to be the fastest-growing and most profitable business of the company. For the quarter, AWS sales jumped 45 percent year-over-year, while generating $1.3 billion in operating income, a whopping 64 percent share of Amazon's total operating income.

Jeff Bezos’ fortune tops $120 billion as Amazon shares surge after hours

Feb 2, 2018

Jeff Bezos got a little bit richer Thursday after Amazon.com Inc. shares soared in after-hours trading, sending his personal fortune above $120 billion.

After tumbling during the regular session (and losing Bezos almost $5 billion), Amazon shares jumped 6.2% in late trading after reporting fourth-quarter profit and revenue that far exceeded analysts’ expectations.

If the gain holds when trading begins Friday, the Amazon founder and CEO will have made about $6.5 billion overnight, pushing his total wealth to about $123 billion, according to the Bloomberg Billionaires Index.

This year has already been good to Bezos, who made $17.4 billion in January alone.

Bezos is ranked as the world’s richest man, surpassing Microsoft Corp. co-founder Bill Gates for the first time last summer. At the end of Thursday trading, Bezos had about a $21 billion lead on Gates, who is in second place.

Amazon to Launch Delivery Service That Would Vie With FedEx, UPS

The company is preparing to begin the offering in Los Angeles with its ‘third-party merchants’ and then roll it out more broadly

Feb. 9, 2018

Amazon.com Inc is preparing to launch a delivery service for businesses, positioning it to directly compete with United Parcel Service Inc. and FedEx Corp.

Dubbed “Shipping with Amazon,” or SWA, the new service will entail the tech giant picking up packages from businesses and shipping them to consumers, according to people familiar with the matter.

Amazon expects to roll out the new delivery service in Los Angeles in coming weeks with third-party merchants that sell goods via its website, according to the people. Amazon then aims to expand the service to more cities as soon as this year, some of the people say.

While the program is being piloted with the company’s third-party sellers, it is envisioned to eventually be opened to other businesses too, according to some of the people. Amazon is planning to undercut UPS and FedEx on pricing, although the exact rate structure is still unclear, these people said.

The new service, which stems from a Los Angeles pilot project first reported by The Wall Street Journal more than a year ago, moves Amazon into direct competition for parcel business currently handled by delivery partners UPS and FedEx. “Shipping With Amazon” was previously tested and rolled out in London.

It is the latest move by Amazon to create its own freight and parcel delivery network. In the last couple of years, Amazon has expanded into ocean freight, built a network of its own drivers who can now deliver inside homes and leased up to 40 aircraft while establishing an air cargo hub.

Amazon already delivers some of its own orders in at least 37 U.S. cities. With the new “Shipping with Amazon” option, Amazon plans to send drivers to pick up shipments from warehouses and businesses itself and deliver the packages when it is able, the people said. For shipments outside Amazon’s delivery reach, the U.S. Postal Service and other carriers will take care of the so-called last mile to customers’ doorsteps.

It remains to be seen whether Amazon can successfully deliver packages for other businesses on a broad scale. UPS and FedEx have built out massive networks over the course of decades to allow them to deliver across the U.S. And it is expensive. UPS this year alone is planning to spend up to $7 billion on upgrading its delivery network.

Amazon started building out its logistics network in earnest after it missed deliveries during the all-important holiday season in December 2013, according to people familiar with Amazon’s thinking. As more shoppers bought products online, Amazon executives concluded that the rate of parcel growth was too large for existing carriers to handle. Amazon also wanted to offer two-day deliveries, seven days a week.

The company has separately launched a logistics service called “FBA Onsite,” according to the people familiar with the matter. Currently, most third-party sellers on Amazon’s website ship their goods to an Amazon warehouse for its “Fulfillment by Amazon” program to qualify for Prime shipping. With FBA Onsite, sellers automatically qualify for Prime and then can ship directly from their own warehouse using software provided by Amazon.

While Amazon will control the method of those shipments, pickups and deliveries for now will still be handled by various carriers, including UPS and FedEx, the people said. Bloomberg News earlier reported on FBA Onsite.

For its “Shipping with Amazon” option, the online retail giant is expected to be able to offer lower prices than UPS and FedEx because it already delivers some of its own packages—any extra space it can fill in its trucks with additional deliveries is considered added revenue, according to people familiar with the company’s thinking.

Amazon buys Ring, the smart doorbell maker it backed through Alexa Fund

Published 6 Mins Ago

Amazon is buying smart doorbell maker Ring, a deal that will allow Amazon to work with the team on home security, the companies said.

n an email statement to CNBC, Ring's spokesperson confirmed the deal, saying, "We'll be able to achieve even more by partnering with an inventive, customer-centric company like Amazon. We look forward to being a part of the Amazon team as we work toward our vision for safer neighborhoods."

Amazon is expected to keep Ring as an independent business, much like it has with other its acquisitions, like Zappos and Twitch, according to GeekWire, which earlier reported details of the deal. Financial terms of the deal were not disclosed.The two companies are expected to announce the deal later today.

Amazon's spokesperson also confirmed the deal, saying, "Ring's home security products and services have delighted customers since day one. We're excited to work with this talented team."

Ring has raised $209 million so far, and was last valued at $760 million, according to Pitchbook.

This isn't the first time Amazon has partnered with Ring. The e-commerce company previously invested in Ring through its Alexa Fund, which exclusively invests in companies that help scale its Alexa voice-technology.

Amazon will stop selling Nest smart home devices, escalating its war with Google

Mar. 2, 2018

It was an awkward phone call, but one the Nest team had been expecting.

After weeks of silence, Amazon's retail team informed Nest employees on a conference call late last year that it would not list any of the newer Nest products recently announced by the company, according to a person familiar with the call. The products in question include the latest Nest thermostat and the Nest Secure home security system, among others.

On that call, says the person, Amazon told Nest that the decision came from the top — and that it had nothing to do with the quality of Nest products, which had great reviews on Amazon. Nest employees who were on the call ended the discussion under the impression that the decision had come from Amazon CEO Jeff Bezos, although Amazon's retail team didn't explicitly say that at any point, according to a person familiar with the call.

Amazon's decision not to sell Nest products has huge implications as it strives to carve out a new computing platform — and as it continues to clash with Google over the future of computing.

After missing out on smartphones and finding limited success with its line of Fire tablets, Amazon is betting big on Alexa as a new computing platform. Alexa is both Amazon's AI assistant and its platform for smart home gadgets, including connected lights, door locks, and music speakers. The company has gotten more aggressive with competitors recently — especially Google, the owner of Nest, which is Amazon's biggest competitor in the smart home with its own Google Assistant platform. Amazon also announced in February that it would buy Ring, the maker of camera-equipped doorbells and other connected home security devices, in a deal said to be worth about $1 billion.

Nest was warned of Amazon's decision, even before that fateful call. Representatives from Google, its sister company at the time under their Alphabet parent company, told Nest that they had heard from Amazon that the ecommerce giant had decided not to sell newer Nest devices. Google reabsorbed Nest last month.

Amazon's war with Google

Amazon's move against Nest comes as it works to beef up its smart home ambitions after a successful holiday season for the Alexa assistant and its Echo hardware. Last month's Ring acquisition puts Amazon in a much better position to integrate its products with Alexa, accelerating its ability to compete with Google's own smart home ambitions.

Nest is Google's smart home products division. It makes devices like connected cameras, thermostats, smoke detectors, and security systems. Google bought Nest in 2014 in a $3.2 billion deal.

Amazon built up an early lead in voice-controlled computing thanks to Alexa and its line of Echo devices. But Google is rapidly catching up. Google Assistant, a rival to Amazon Alexa and the Google Home speakers, which compete with the Amazon Echo, are rapidly gaining market traction.

Amazon had about two-thirds of the smart speaker market towards end of 2017, but that figure doesn't reflect the full holiday shopping season, when Google likely gained more market share.

The stakes are huge. Both Amazon and Google are building out a new voice-powered operating system that can control everything in your life — from your lights to your garage door to the music and video you stream. Amazon's acquisition of Ring will give it a nice boost on the hardware side as it continues to build out Alexa's AI. Ring was already one of Nest's biggest competitors. Now it has the nearly-limitless funding needed from Amazon to go after its Google-backed rival.

The rivalry between Amazon and Google extends beyond the smart home, though.

In addition to ending sales of Nest products, Amazon does not sell other Google hardware like the Google Home Speaker or Pixel smartphone. In a seemingly retaliatory move, Google has blocked its YouTube native app from running on Amazon's Fire TV and Echo Show. (Google, for its part, has said the block is because Amazon products violate YouTube's terms of service.) Amazon will start selling Google's Chromecast streaming devices soon, which may help ease tensions between the companies and convince YouTube to bring its service back to the Fire TV and Echo Show.

Beyond hardware and apps, Amazon is also beefing up its digital ads business, a direct threat to Google's core business, as CNBC reported last year. Amazon and Google also compete in providing cloud computing services to companies, through its respective Amazon Web Services and Google Cloud divisions.

Amazon's beef with Google isn't unique in an industry dominated by a small handful of giants. Amazon also had a rocky relationship with Apple. It took about two years for whatever was going on between the two companies to get resolved after Apple opened up the Apple TV to all third-party developers. Amazon started selling the Apple TV again last year, and it later added its video-streaming app to the Apple TV App Store.

While Amazon's decision to keep Nest products off its site may seem nefarious to some, it likely isn't illegal under US antitrust law, as Chris Sagers, a professor of law at Cleveland State University told Business Insider in an interview. Because Amazon doesn't have a monopoly in the connected home, the move isn't anticompetitive.

"It's probably not illegal," Sagers said. "It's ugly... but American law says even monopolists have broad freedom to choose with whom they deal."

Are You Ready for an Amazon-Branded Checking Account?

March 5, 2018

Amazon.com Inc. is in talks with big banks including JPMorgan Chase & Co. about building a checking-account-like product the e-commerce giant could offer its customers, according to people familiar with the matter.

The effort is still in its early stages and may not come to fruition, the people said. The talks with financial firms are focused on creating a product that would appeal to younger customers and those without bank accounts. Whatever its final form, the initiative wouldn’t involve Amazon becoming a bank, the people added.

If the product emerges, it would further inject Amazon into the lives of those who shop on its website and at its Whole Foods grocery stores, read on its Kindles, watch its streaming video and chat with Alexa, its digital assistant. Offering a product that is similar to an own-branded bank account could help reduce fees Amazon pays to financial firms and provide it with valuable data on customers’ income and spending habits.

The company’s latest push also answers a question that bank executives have been asking with increasing worry: When will Amazon show up on their turf?

With millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor. Its more-than $700 billion market value eclipses the combined value of JPMorgan and Bank of America Corp , the two biggest U.S. banks.

Already Amazon is building a delivery service that one day could compete with United Parcel Service Inc. and FedEx Corp. , targeting the hospital-supplies market and considering a push into prescription drugs. Shares of companies in those industries have fallen sharply on news of Amazon’s entry.

In banking, however, Amazon appears to be arriving more as a partner than a disrupter.

Last fall, it put out a request for proposals from several banks for a hybrid-type checking account and is weighing pitches from firms including JPMorgan and Capital One Financial Corp. , some of the people said. It is too early to say exactly what the product will look like, including whether it would give customers the ability to write checks, directly pay bills, or access to a nationwide ATM network.

Any move by Amazon to start its own banking arm would subject it to capital rules and other regulations that likely would limit its aggressive expansion. And there would likely be stiff opposition. An effort by Walmart Inc. more than a decade ago to obtain a type of banking license withered after intense criticism from a range of companies and lawmakers.

For JPMorgan or Capital One, winning the assignment would be a chance to keep a potential competitor close and strengthen ties to a company that is popular among millennials, whose financial habits are changing quickly. In a recent poll of 1,000 Amazon customers conducted by LendEDU, an online student lender, 38% said they would trust Amazon to handle their finances equally as they would a traditional bank.

JPMorgan is already close to Amazon. It has issued Amazon-branded credit cards since 2002, and the two companies are teaming up along with Berkshire Hathaway Inc. on an initiative to tackle rising health care costs for their employees.

Amazon has been considering a bigger push into finance for years, looking to reduce the fees it pays banks and payments processors, people familiar with the matter said. Providing Amazon customers with a checking account from which they could directly withdraw cash for purchases could help to reduce some of those fees. But there isn’t much precedent for this type of arrangement. It is much more complicated than, say, a co-branded credit card.

Converting its shoppers into financial account holders could also aid Amazon as it ramps up its efforts in payments, a fragmented space with no clear winner yet. The company has had limited success in getting its own system, Amazon Pay, accepted at other online merchants.

The company is now trying to bring Amazon Pay to brick-and-mortar stores, according to people familiar with those plans. It is likely to begin with Whole Foods, which Amazon bought last year for roughly $13.5 billion, the people said.

Not yet clear: what Amazon can offer merchants, which already face a number of payment-providers jockeying for space at the checkout counter. But shoppers who have an everyday banking relationship with Amazon might be more likely to use Amazon Pay.

Converting its shoppers into financial account holders could also aid Amazon as it ramps up its efforts in payments, a fragmented space with no clear winner yet. The company has had limited success in getting its own system, Amazon Pay, accepted at other online merchants.

The company is now trying to bring Amazon Pay to brick-and-mortar stores, according to people familiar with those plans.

Not yet clear: what Amazon can offer merchants, which already face a number of payment-providers jockeying for space at the checkout counter.

Amazon just passed Alphabet to become the world's second most valuable company

Mar 20, 2018

Amazon has passed Alphabet and now trails just Apple among the list of the world's most valuable companies.

The e-commerce giant rose 2.7 percent on Tuesday lifting its stock market value to $768 billion. Alphabet, the parent of Google, fell 0.4 percent and is now valued at $762.5 billion.

While the U.S. tech mega-caps have rallied in the past year, Amazon's performance has dwarfed them all, with the stock surging 85 percent over the past 12 months, including 35 percent to start 2018.

Investors have been piling into Amazon, betting that the company's growing and very profitable cloud computing business will provide the cash needed for investments in original content, physical stores and continuing to build data centers and warehouses.

Meanwhile, Facebook's plunge has dropped the social network's market value below Berkshire Hathaway. Facebook, now the seventh most valuable company, has lost over 9 percent of its market capitalization in the past two days following revelations on Friday and over the weekend that Cambridge Analytica had misused data tied to 50 million Facebook users.

Microsoft is the fourth biggest company by market cap, followed by China's Tencent.

To our shareowners:

The American Customer Satisfaction Index recently announced the results of its annual survey, and for the 8th year in a row customers ranked Amazon #1. The United Kingdom has a similar index, The U.K. Customer Satisfaction Index, put out by the Institute of Customer Service. For the 5th time in a row Amazon U.K. ranked #1 in that survey. Amazon was also just named the #1 business on LinkedIn’s 2018 Top Companies list, which ranks the most sought after places to work for professionals in the United States. And just a few weeks ago, Harris Poll released its annual Reputation Quotient, which surveys over 25,000 consumers on a broad range of topics from workplace environment to social responsibility to products and services, and for the 3rd year in a row Amazon ranked #1.

Congratulations and thank you to the now over 560,000 Amazonians who come to work every day with unrelenting customer obsession, ingenuity, and commitment to operational excellence. And on behalf of Amazonians everywhere, I want to extend a huge thank you to customers. It’s incredibly energizing for us to see your responses to these surveys.

. . . .

Recent Milestones

The high standards our leaders strive for have served us well. And while I certainly can’t do a handstand myself, I’m extremely proud to share some of the milestones we hit last year, each of which represents the fruition of many years of collective effort. We take none of them for granted.

• Prime – 13 years post-launch, we have exceeded 100 million paid Prime members globally. In 2017 Amazon shipped more than five billion items with Prime worldwide, and more new members joined Prime than in any previous year – both worldwide and in the U.S. Members in the U.S. now receive unlimited free two-day shipping on over 100 million different items. We expanded Prime to Mexico, Singapore, the Netherlands, and Luxembourg, and introduced Business Prime Shipping in the U.S. and Germany. We keep making Prime shipping faster as well, with Prime Free Same-Day and Prime Free One-Day delivery now in more than 8,000 cities and towns. Prime Now is available in more than 50 cities worldwide across nine countries. Prime Day 2017 was our biggest global shopping event ever (until surpassed by Cyber Monday), with more new Prime members joining Prime than any other day in our history.

• AWS – It’s exciting to see Amazon Web Services, a $20 billion revenue run rate business, accelerate its already healthy growth. AWS has also accelerated its pace of innovation – especially in new areas such as machine learning and artificial intelligence, Internet of Things, and serverless computing. In 2017, AWS announced more than 1,400 significant services and features, including Amazon SageMaker, which radically changes the accessibility and ease of use for everyday developers to build sophisticated machine learning models. Tens of thousands of customers are also using a broad range of AWS machine learning services, with active users increasing more than 250 percent in the last year, spurred by the broad adoption of Amazon SageMaker. And in November, we held our sixth re:Invent conference with more than 40,000 attendees and over 60,000 streaming participants.

• Marketplace – In 2017, for the first time in our history, more than half of the units sold on Amazon worldwide were from our third-party sellers, including small and medium-sized businesses (SMBs). Over 300,000 U.S.-based SMBs started selling on Amazon in 2017, and Fulfillment by Amazon shipped billions of items for SMBs worldwide. Customers ordered more than 40 million items from SMBs worldwide during Prime Day 2017, growing their sales by more than 60 percent over Prime Day 2016. Our Global Selling program (enabling SMBs to sell products across national borders) grew by over 50% in 2017 and cross-border ecommerce by SMBs now represents more than 25% of total third-party sales.

• Alexa – Customer embrace of Alexa continues, with Alexa-enabled devices among the best-selling items across all of Amazon. We’re seeing extremely strong adoption by other companies and developers that want to create their own experiences with Alexa. There are now more than 30,000 skills for Alexa from outside developers, and customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa. The foundations of Alexa continue to get smarter every day too. We’ve developed and implemented an on-device fingerprinting technique, which keeps your device from waking up when it hears an Alexa commercial on TV. (This technology ensured that our Alexa Super Bowl commercial didn’t wake up millions of devices.) Far-field speech recognition (already very good) has improved by 15% over the last year; and in the U.S., U.K., and Germany, we’ve improved Alexa’s spoken language understanding by more than 25% over the last 12 months through enhancements in Alexa’s machine learning components and the use of semi-supervised learning techniques. (These semi-supervised learning techniques reduced the amount of labeled data needed to achieve the same accuracy improvement by 40 times!) Finally, we’ve dramatically reduced the amount of time required to teach Alexa new languages by using machine translation and transfer learning techniques, which allows us to serve customers in more countries (like India and Japan).

• Amazon devices – 2017 was our best year yet for hardware sales. Customers bought tens of millions of Echo devices, and Echo Dot and Fire TV Stick with Alexa were the best-selling products across all of Amazon – across all categories and all manufacturers. Customers bought twice as many Fire TV Sticks and Kids Edition Fire Tablets this holiday season versus last year. 2017 marked the release of our all-new Echo with an improved design, better sound, and a lower price; Echo Plus with a built-in smart home hub; and Echo Spot, which is compact and beautiful with a circular screen. We released our next generation Fire TV, featuring 4K Ultra HD and HDR; and the Fire HD 10 Tablet, with 1080p Full HD display. And we celebrated the 10th anniversary of Kindle by releasing the all-new Kindle Oasis, our most advanced reader ever. It’s waterproof – take it in the bathtub – with a bigger 7” high-resolution 300 ppi display and has built-in audio so you can also listen to your books with Audible.

• Prime Video – Prime Video continues to drive Prime member adoption and retention. In the last year we made Prime Video even better for customers by adding new, award-winning Prime Originals to the service, like The Marvelous Mrs. Maisel, winner of two Critics’ Choice Awards and two Golden Globes, and the Oscar-nominated movie The Big Sick. We’ve expanded our slate of programming across the globe, launching new seasons of Bosch and Sneaky Pete from the U.S., The Grand Tour from the U.K., and You Are Wanted from Germany, while adding new Sentosha shows from Japan, along with Breathe and the award-winning Inside Edge from India. Also this year, we expanded our Prime Channels offerings, adding CBS All Access in the U.S. and launching Channels in the U.K. and Germany. We debuted NFL Thursday Night Football on Prime Video, with more than 18 million total viewers over 11 games. In 2017, Prime Video Direct secured subscription video rights for more than 3,000 feature films and committed over $18 million in royalties to independent filmmakers and other rights holders. Looking forward, we’re also excited about our upcoming Prime Original series pipeline, which includes Tom Clancy’s Jack Ryan starring John Krasinski; King Lear, starring Anthony Hopkins and Emma Thompson; The Romanoffs, executive produced by Matt Weiner; Carnival Row starring Orlando Bloom and Cara Delevingne; Good Omens starring Jon Hamm; and Homecoming, executive produced by Sam Esmail and starring Julia Roberts in her first television series. We acquired the global television rights for a multi-season production of The Lord of the Rings, as well as Cortés, a miniseries based on the epic saga of Hernán Cortés from executive producer Steven Spielberg, starring Javier Bardem, and we look forward to beginning work on those shows this year.

• Amazon Music – Amazon Music continues to grow fast and now has tens of millions of paid customers. Amazon Music Unlimited, our on-demand, ad-free offering, expanded to more than 30 new countries in 2017, and membership has more than doubled over the past six months.

• Fashion – Amazon has become the destination for tens of millions of customers to shop for fashion. In 2017, we introduced our first fashion-oriented Prime benefit, Prime Wardrobe – a new service that brings the fitting room directly to the homes of Prime members so they can try on the latest styles before they buy. We introduced Nike and UGG on Amazon along with new celebrity collections by Drew Barrymore and Dwyane Wade, as well as dozens of new private brands, like Goodthreads and Core10. We’re also continuing to enable thousands of designers and artists to offer their exclusive designs and prints on demand through Merch by Amazon. We finished 2017 with the launch of our interactive shopping experience with Calvin Klein, including pop-up shops, on-site product customization, and fitting rooms with Alexa-controlled lighting, music, and more.

• Whole Foods – When we closed our acquisition of Whole Foods Market last year, we announced our commitment to making high-quality, natural and organic food available for everyone, then immediately lowered prices on a selection of best-selling grocery staples, including avocados, organic brown eggs, and responsibly-farmed salmon. We followed this with a second round of price reductions in November, and our Prime member exclusive promotion broke Whole Foods’ all-time record for turkeys sold during the Thanksgiving season. In February, we introduced free two-hour delivery on orders over $35 for Prime members in select cities, followed by additional cities in March and April, and plan continued expansion across the U.S. throughout this year. We also expanded the benefits of the Amazon Prime Rewards Visa Card, enabling Prime members to get 5% back when shopping at Whole Foods Market. Beyond that, customers can purchase Whole Foods’ private label products like 365 Everyday Value on Amazon, purchase Echo and other Amazon devices in over a hundred Whole Foods stores, and pick-up or return Amazon packages at Amazon Lockers in hundreds of Whole Foods stores. We’ve also begun the technical work needed to recognize Prime members at the point of sale and look forward to offering more Prime benefits to Whole Foods shoppers once that work is completed.

• Amazon Go – Amazon Go, a new kind of store with no checkout required, opened to the public in January in Seattle. Since opening, we’ve been thrilled to hear many customers refer to their shopping experience as “magical.” What makes the magic possible is a custom-built combination of computer vision, sensor fusion, and deep learning, which come together to create Just Walk Out shopping. With JWO, customers are able to grab their favorite breakfast, lunch, dinner, snack, and grocery essentials more conveniently than ever before. Some of our top-selling items are not surprising – caffeinated beverages and water are popular – but our customers also love the Chicken Banh Mi sandwich, chocolate chip cookies, cut fruit, gummy bears, and our Amazon Meal Kits.

• Treasure Truck – Treasure Truck expanded from a single truck in Seattle to a fleet of 35 trucks across 25 U.S. cities and 12 U.K. cities. Our bubble-blowing, music-pumping trucks fulfilled hundreds of thousands of orders, from porterhouse steaks to the latest Nintendo releases. Throughout the year, Treasure Truck also partnered with local communities to lift spirits and help those in need, including donating and delivering hundreds of car seats, thousands of toys, tens of thousands of socks, and many other essentials to community members needing relief, from those displaced by Hurricane Harvey, to the homeless, to kids needing holiday cheer.

• India – Amazon.in is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. The Amazon.in mobile shopping app was also the most downloaded shopping app in India in 2017, according to App Annie. Prime added more members in India in its first year than any previous geography in Amazon’s history. Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production.

• Sustainability – We are committed to minimizing carbon emissions by optimizing our transportation network, improving product packaging, and enhancing energy efficiency in our operations, and we have a long-term goal to power our global infrastructure using 100% renewable energy. We recently launched Amazon Wind Farm Texas, our largest wind farm yet, which generates more than 1,000,000 megawatt hours of clean energy annually from over 100 turbines. We have plans to host solar energy systems at 50 fulfillment centers by 2020, and have launched 24 wind and solar projects across the U.S. with more than 29 additional projects to come. Together, Amazon’s renewable energy projects now produce enough clean energy to power over 330,000 homes annually. In 2017 we celebrated the 10-year anniversary of Frustration-Free Packaging, the first of a suite of sustainable packaging initiatives that have eliminated more than 244,000 tons of packaging materials over the past 10 years. In addition, in 2017 alone our programs significantly reduced packaging waste, eliminating the equivalent of 305 million shipping boxes. And across the world, Amazon is contracting with our service providers to launch our first low-pollution last-mile fleet. Already today, a portion of our European delivery fleet is comprised of low-pollution electric and natural gas vans and cars, and we have over 40 electric scooters and e-cargo bikes that complete local urban deliveries.

• Empowering Small Business – Millions of small and medium-sized businesses worldwide now sell their products through Amazon to reach new customers around the globe. SMBs selling on Amazon come from every state in the U.S., and from more than 130 different countries around the world. More than 140,000 SMBs surpassed $100,000 in sales on Amazon in 2017, and over a thousand independent authors surpassed $100,000 in royalties in 2017 through Kindle Direct Publishing.

• Investment & Job Creation – Since 2011, we have invested over $150 billion worldwide in our fulfillment networks, transportation capabilities, and technology infrastructure, including AWS data centers. Amazon has created over 1.7 million direct and indirect jobs around the world. In 2017 alone, we directly created more than 130,000 new Amazon jobs, not including acquisitions, bringing our global employee base to over 560,000. Our new jobs cover a wide range of professions, from artificial intelligence scientists to packaging specialists to fulfillment center associates. In addition to these direct hires, we estimate that Amazon Marketplace has created 900,000 more jobs worldwide, and that Amazon’s investments have created an additional 260,000 jobs in areas like construction, logistics, and other professional services.

• Career Choice – One employee program we’re particularly proud of is Amazon Career Choice. For hourly associates with more than one year of tenure, we pre-pay 95% of tuition, fees, and textbooks (up to $12,000) for certificates and associate degrees in high-demand occupations such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, and nursing. We fund education in areas that are in high demand and do so regardless of whether those skills are relevant to a career at Amazon. Globally more than 16,000 associates (including more than 12,000 in the U.S.) have joined Career Choice since the program launched in 2012. Career Choice is live in ten countries and expanding to South Africa, Costa Rica, and Slovakia later this year. Commercial truck driving, healthcare, and information technology are the program’s most popular fields of study. We’ve built 39 Career Choice classrooms so far, and we locate them behind glass walls in high traffic areas inside our fulfillment centers so associates can be inspired by seeing their peers pursue new skills.

The credit for these milestones is deserved by many. Amazon is 560,000 employees. It’s also 2 million sellers, hundreds of thousands of authors, millions of AWS developers, and hundreds of millions of divinely discontent customers around the world who push to make us better each and every day.

Path Ahead

This year marks the 20th anniversary of our first shareholder letter, and our core values and approach remain unchanged. We continue to aspire to be Earth’s most customer-centric company, and we recognize this to be no small or easy challenge. We know there is much we can do better, and we find tremendous energy in the many challenges and opportunities that lie ahead.

A huge thank you to each and every customer for allowing us to serve you, to our shareowners for your support, and to Amazonians everywhere for your ingenuity, your passion, and your high standards.

As always, I attach a copy of our original 1997 letter. It remains Day 1.

Sincerely,
Jeffrey P. Bezos
Founder and Chief Executive Officer
Amazon.com, Inc.

Amazon jumps after huge earnings beat

Apr. 26, 2018

Amazon reported its first-quarter earnings results on Thursday after the bell.

It's a huge beat across the board and Amazon stock is up over 7 percent in after hour trading.

Here are the most important numbers:

• Revenue: $51.04 billion vs. $49.78 billion, as estimated, according to Thomson Reuters
• EPS: $3.27 per share vs $1.26 per share, as estimated, according to Thomson Reuters*
• AWS revenue: $5.44 billion vs. $5.25 billion, as estimated, according to FactSet

Amazon's revenue, which includes sales from Whole Foods, increased 43 percent year-over-year. Its North America revenue jumped 46 percent to $30.7 billion, while international sales grew 34 percent to $14.8 billion.

Amazon's cloud unit, AWS, continued to be the growth driver of the company. For the quarter, AWS sales grew 49 percent year-over-year, to $5.44 billion, while generating $1.4 billion in operating income, a whopping 73 percent share of Amazon's total operating income.

In a prepared statement, Amazon CEO Jeff Bezos highlighted the massive success of AWS.

"AWS had the unusual advantage of a seven-year head start before facing like-minded competition, and the team has never slowed down," said Bezos. "As a result, the AWS services are by far the most evolved and most functionality-rich."

Amazon gave revenue guidance in the range of $51.0 billion to $54.0 billion, in-line with street estimate of $52.2 billion.

Amazon cloud revenue jumps 49 percent in first quarter

Apr. 26, 2018

Amazon's cloud business exceeded analyst estimates, with revenue climbing 49 percent in the first quarter.

Amazon Web Services reported sales on Thursday of $5.44 billion, compared to the $5.26 billion average estimate of analysts surveyed by FactSet. AWS contributed about 11 percent of Amazon's total revenue for the period, up from 8.5 percent in the prior quarter.

AWS continues to be a big revenue driver and even larger profit engine for its parent company, which dominates the low-margin e-commerce market. In cloud-computing infrastructure, Amazon has a substantial market share lead over Microsoft Azure, Google's Cloud platform and IBM, as well as other players like Alibaba and Oracle.

While AWS has maintained growth above 40 percent, Microsoft and Google are currently expanding much faster and picking up share.

AWS produced $1.4 billion in operating income in the first quarter. That accounted for 73 percent of Amazon's $1.93 billion in operating income.

The higher-margin AWS business "will continue to positively impact total company margins," wrote Mark Mahaney, an analyst at RBC Capital Markets, in a report ahead of the earnings announcement.

Amazon’s Fiscal Discipline Pays Off as It More Than Doubles Profit

April 26, 2018

Amazon.com Inc. on Thursday delivered a double punch, reporting its best revenue growth in more than six years while topping $1 billion in profit for the second straight quarter.

The results surprised investors who were already expecting Amazon to post strong numbers as it extends its dominance in online retailing and builds on gains in cloud-computing services. But this quarter, Amazon was expected to post a more modest profit as it refocused on longer-term investments after a blowout holiday period.

Instead, Amazon more than doubled its quarterly net profit to $1.6 billion — just under its record of $1.9 billion from the holiday quarter — as revenue surged about 43%. The profit feat is an achievement for a company with a reputation for plowing nearly every dollar it earns into investments.

The revenue growth was Amazon’s best mark since the third quarter of 2011, pushing the total to about $51 billion. The company credited the better-than-expected results to its cloud-services division and strong growth in the company’s advertising business.

Amazon’s swelling profitability doesn’t appear to be an anomaly — it expects operating income to potentially more than double to as high as $1.9 billion in the second quarter — though Chief Financial Officer Brian Olsavsky cautioned he might not always have such good news.

“We certainly will always have periods of higher investment, and through the year we expect investments to increase,” particularly for video content, Mr. Olsavsky said. He added that the company will continue to hire.

Amazon Chief Executive Jeff Bezos has told investors his company is focused on customers first, sacrificing short-term profit to keep prices low, urgently ship packages and expand into a broad array of services, including cloud computing and movie production. While it still spends heavily on logistics and expansion — its expenses rose 42% to about $49 billion — the company appears no longer satisfied with razor-thin profit margins.

Amazon’s profit, however, pales in comparison with other technology giants that generate far less revenue. Facebook Inc. on Wednesday posted a profit of nearly $5 billion as its revenue surged 50%; shares in Facebook rose 9.1% on Thursday. Microsoft Corp.’s quarterly profit jumped 35% to $7.42 billion, while Google parent Alphabet Inc.’s profit soared 73% to $9.4 billion.

Amazon’s dominant share of the e-commerce market is fueling revenue growth as traditional brick-and-mortar chains increasingly struggle and close more stores. Online sales are growing faster than overall retail, and Amazon currently commands roughly 43 cents of every dollar spent online, according to estimates by research firm eMarketer. The company’s loyal base of Prime members, who analysts estimate spend significantly more than the average shopper on the site, now exceeds 100 million globally.

Amazon Web Services, the company’s cloud-services division, experienced big growth. Revenue at the division, which helps drive profit, rose 49% to $5.44 billion, while operating income increased 57% to $1.4 billion. The division has faced stronger competition from rivals such as Microsoft and Google in recent months. Microsoft said Thursday that its cloud-business revenue rose 93%, though it didn’t disclose a total.

The company forecast revenue of between $51 billion and $54 billion and operating income of between $1.1 billion and $1.9 billion for the second quarter, compared with $628 million a year earlier.

Amazon Offers Retailers Discounts to Adopt Payment System

May 2, 2018

Amazon.com Inc. is offering to pass along the discounts it gets on credit-card fees to other retailers if they use its online payments service, according to people with knowledge of the matter, in a new threat to PayPal Holdings Inc. and card-issuing banks.

The move shows Amazon is willing to sacrifice the profitability of its payments system to spread its use. Swipe fees are a $90 billion-a-year business for lenders such as JPMorgan Chase & Co. and Citigroup Inc., networks including Visa Inc. and Mastercard Inc., and payment processors like First Data Corp. and Stripe Inc., which pocket a fraction of every sale when shoppers swipe cards or click “buy now.”

The financial industry’s fees amount to about 2 percent of a typical credit-card transaction, or 24 cents for debit. But big stores such as Amazon and Walmart Inc. have long been able to negotiate lower rates for themselves based on their massive sales volume. Now, Amazon is offering to pass its discount along to at least some smaller merchants if they agree to embrace its Amazon Pay service, said the people, who asked not to be identified because they aren’t authorized to discuss the plan publicly.

Previously, online merchants using Amazon’s service have paid about 2.9 percent of each credit-card transaction plus 30 cents, which is divvied up among Amazon, card issuers and payment networks. As part of its experiment, Amazon is offering to negotiate lower fees with merchants making long-term commitments to use the service, according to one person familiar with the matter.

Amazon is able to export the rates it has negotiated with banks and payment networks because, like PayPal, it’s acting as a so-called payments facilitator. That means it aggregates smaller merchants to help them reduce the cost of accepting electronic payments.

Amazon Pay, which has attracted more than 30 million users since the company revived it in 2013, lets online shoppers log into their Amazon accounts from other websites, enabling them to complete the transaction using credit cards and delivery addresses already stored rather than having to enter them again. For Amazon, that means drawing additional revenue from e-commerce sales on other sites.

The service mostly appeals to smaller merchants who benefit from the trust shoppers place in Amazon, as well as minimizing the data entry required to complete a mobile transaction.

Amazon’s move is part of an escalating battle in the U.S. between traditional financial firms and technology giants to develop a dominant digital payments system -- akin to what Jack Ma’s Alipay and Tencent Holdings Ltd.’s WeChat Pay have achieved in China.

Last month, Visa and Mastercard said they’re teaming up on their own combined online checkout button, abandoning their separate Visa Checkout and Masterpass initiatives. For its part, Visa is betting there will be just one button at the online checkout in the future, Chief Executive Officer Al Kelly said on a conference call with analysts last month.

The networks’ joint effort has been seen as a challenge to Amazon Pay, as well as to PayPal, which is considered the U.S. leader in digital wallets with 237 million global accounts.

Amazon to Buy Online Pharmacy PillPack

June 28, 2018

Amazon.com Inc. is buying online pharmacy PillPack, pushing into a market dominated by CVS Health Corp. and Walgreens Boots Alliance Inc.

PillPack sells medications in presorted doses and ships them from its pharmacy in Manchester, N.H., to customers’ homes in every U.S. state except Hawaii. Terms of the deal weren’t disclosed.

Walgreens executives were in the midst of a call with financial analysts when Amazon announced the deal. Walgreens CEO Stefano Pessina said the company is “not particularly worried” about the move.

The drugstore chain is “not complacent,” he said, but “the pharmacy world is much more complex than just delivering certain pills or packages. I strongly believe that the role of the physical pharmacy will continue to be very, very important in the future.”

Walgreens, he said, is bolstering health-related services in local stores while also offering delivery options to customers.

PillPack, which was started in 2013, has raised $118 million in venture capital. Its co-founder and CEO TJ Parker said in November that it had tens of thousands of customers and was on track for more than $100 million in annual revenue.

Amazon has been debating internally whether to enter the pharmacy market for years, according to people familiar with its thinking. It is a natural next step for the online retail giant, but the industry is a complex one.

Amazon typically builds most businesses itself from scratch. When it does decide to make an acquisition, it is usually because the company thinks it will be a faster road to entering that market or to acquire needed expertise, according to people familiar with its thinking. In PillPack’s case, it is likely a combination of both.

The deal is expected to close during the second half of this year, the companies said Thursday.

To stave off home-delivery-service competition from Amazon.com and other rivals, CVS earlier this month struck a deal with the U.S. Postal Service to pick up prescriptions at CVS stores and bring them to customers’ homes in one or two days. Customers will be charged $4.99 per delivery, which could include over-the-counter products such as aspirin or face wash.

Analysts have long speculated when Amazon would make a deeper play into the pharmacy business, either through launching a prescription offering or making a push into medical supplies.

CVS’s $66 billion bid for insurer Aetna Inc. was in part an attempt to position the company to better defend against Amazon as a potential rival.

In February, The Wall Street Journal reported Amazon was pushing to turn its nascent medical-products business into a major supplier to U.S. hospitals and outpatient clinics that could compete with distributors of items ranging from gauze to hip implants.

Amazon had invited hospital executives to its Seattle headquarters on several occasions to sound out ideas for expanding its business-to-business marketplace, Amazon Business, into one where hospitals could shop to stock outpatient locations, operating suites and emergency rooms, according to hospital executives who attended the meetings, the Journal reported.

The Seattle company has had an on-again-off-again interest in health care. In 1999, it bought a 40% stake in Drugstore.com Inc. Drugstore.com eventually was bought by bricks-and-mortar retailer Walgreens, which said in 2016 it was shutting down the site to focus on its own digital efforts.

Amazon reveals a new plan to deliver more packages: Recruit people to run small-scale delivery services

June 28, 2018

Watch out FedEx, UPS, DHL and the U.S. Postal Service: Amazon is building its own last-mile delivery service.

The e-commerce behemoth announced on Thursday its new Delivery Service Partners program — designed to let entrepreneurs run their own local delivery networks of up to 40 vans emblazoned with Prime logos.

Each delivery unit will start their day at one of 75 current Amazon stations in the U.S. where parcels ordered from Amazon.com are picked up by drivers wearing blue-collared shirts with an Amazon logo and black hats. Algorithms will determine which packages are sent to these delivery stations, and which are sent to other delivery partners, like FedEx and UPS.

"This is all about scaling cost effectively,” said Dave Clark, senior vice president of Amazon Worldwide Operations. He said the new delivery program will help meet the growth in e-commerce. “We are going to have to meet this growth, and it's outpacing the growth of our core providers.”

In its latest annual 10-K filing, Amazon noted the risk associated with relying on external partners like FedEx and UPS. “If we are unable to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact our operating results and customer experience.”

In the filing, Amazon said shipping costs — including sorting, delivery center and transportation expenses — ballooned from $11.5 billion in 2015 to $21.7 billion in 2017, and its shipping costs are expected to continue to increase.

The new program brings more of the costs and customer service under its control, while letting entrepreneurs run the operations under the behemoth’s name.

The e-commerce giant said the program will enable “hundreds” of small businesses to get started, and it will ultimately hire “tens of thousands” of new delivery drivers across the country. This comes at a time when there is a trucker shortage in the U.S., adding to rising transportation costs for many businesses.

Amazon isn't providing an estimate for how many or how long it will take to get more delivery stations built in order to get packages to these new 10s of thousands of delivery drivers.

Each Delivery Service Partner can start a business with as little as a $10,000 investment. The partner is vetted by Amazon, and once accepted, will lease Prime-branded vehicles from Amazon, but the entrepreneur will be in charge of recruiting and hiring drivers. Amazon will offer discounts for costs incurred to run the business on expenses like fuel, insurance and benefit programs. The company says the program is set up so successful delivery partners can make up to $300,000 in annual profit.

Olaoluwa Abimbola has been running his delivery service business in the Denver area as part of the beta test for the last five months. While his background is in computer science and not logistics, he says he’s “loving” his new business and has already hired more than 40 employees who work “fairly regular hours” and “are encouraged to take breaks.”

This new last-mile delivery program is in addition to Amazon Flex, a delivery program in more than 50 U.S. cities that operates more like Uber or Lyft, with “gig workers” delivering parcels from their own vehicles for $18 to $25 an hour.

Amazon’s Delivery Service Partners is just another part of the company’s own logistics network. It already has 7,000 of its own trucks and 40 airplanes which, along with external delivery partners, shipped more than 5 billion Prime items last year.

While Amazon won’t disclose the financials behind the new program, Clark says it’s “much more about customer experience and meeting overall growth. We think this is going to be a cost effective way to do that.”

Shares of FedEx were down more than 2 percent Thursday afternoon, while UPS' stock lost about 2.5 percent on the news.

“UPS closely monitors customer and competitor announcements, but we do not speculate on the likelihood of their success, nor potential impact on UPS’s business," a UPS spokesperson said in a statement to CNBC. "UPS is confident in its strategies and believes there is tremendous opportunity in the B2C market and more growth coming, regardless of how other companies may shift their use of UPS services."

"The Postal Service needs to earn its customers’ business every day by providing great service at a competitive price, and we continue to attract e-commerce customers and business partners because our customers see the value of our predictable service, enhanced visibility, and affordable pricing," a spokesperson for the U.S. Postal Service said.

FedEx didn't immediately respond to CNBC's request for comment.

Amazon earnings: Prime Day isn’t the only thing giving business a boost

July 25, 2018

Amazon.com Inc. is scheduled to report second-quarter earnings on Thursday after the closing bell, and analysts expect the company to get a boost across its businesses, from retail to advertising and cloud services.

“The Prime membership price increase is a solid margin tailwind,” wrote MKM Partners analyst Rob Sanderson. “Prime is thought to be at around 55 million households in the U.S., about $1 billion of incremental profit contribution (annual basis) beginning Q3.”

Amazon is on the road to $1 trillion in market capitalization, with popular opinion convinced that it will beat Apple Inc. to the mark.

Amazon says it got more new Prime members on July 16 than any other day in the company’s history, and items like Fire TV devices, the Echo Show and Instant Pot cookers were big sellers. The company did not release revenue numbers for the event.

MKM’s Sanderson said Prime Day sets the stage for “solid” revenue guidance, with the event expected to add about 200 basis points to the third-quarter.

“Cyber Monday was the largest, reported to be $6.6 billion total for U.S. online sellers,” Sanderson said. “We estimate that Amazon was 47% of online commerce in the U.S. last Q4 (likely more on Cyber Monday), implying that Prime Day was well over $3 billion this year.”

An eMarketer report published July 13 forecasts that Amazon will capture 49.1% of the U.S. e-commerce market this year followed by eBay Inc. (6.6%), Apple (3.9%) and Walmart Inc. (3.7%).

Earnings: FactSet is guiding for earnings of $2.48 including Whole Foods Market, up from 40 cents per share last year.

Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects earnings of $2.65 per share.

Amazon has beat earnings expectations the last three quarters.

Revenue: FactSet expects revenue of $53.37 billion, up from $37.96 billion last year.

Estimize expects revenue of $54.17 billion.

Amazon has beaten revenue expectations the last five quarters.

Operating cash flow increased 22% to $21.8 billion for the trailing twelve months, compared with $17.8 billion for the trailing twelve months ended June 30, 2017. Free cash flow increased to $10.4 billion for the trailing twelve months, compared with $9.6 billion for the trailing twelve months ended June 30, 2017.

Net sales increased 39% to $52.9 billion in the second quarter, compared with $38.0 billion in second quarter 2017.

Operating income increased to $3.0 billion in the second quarter, compared with operating income of $628 million in second quarter 2017.

Net income increased to $2.5 billion in the second quarter, or $5.07 per diluted share, compared with net income of $197 million, or $0.40 per diluted share, in second quarter 2017.


Third Quarter 2018 Guidance

Net sales are expected to be between $54.0 billion and $57.5 billion, or to grow between 23% and 31% compared with third quarter 2017. This guidance anticipates an unfavorable impact of approximately 30 basis points from foreign exchange rates.

Operating income is expected to be between $1.4 billion and $2.4 billion, compared with $347 million in third quarter 2017.

Blue Apron Loses More Customers

Meal-kit company had 717,000 customers at end of June, a 24% drop from last year

Aug. 2, 2018

Blue Apron Holdings Inc. disclosed increasing customer losses, as the meal-kit maker struggles to fix logistical problems dogging its complex operations.

The second biggest meal-kit company by revenue had 717,000 customers at the end of June, a 24% drop from last year, the company said. Customer count was down nearly 9% from the end of this March.

Meal-kit startups are scrambling to become more efficient and consistent in how they deliver boxes of preportioned ingredients and recipes to customers. The sector is growing more competitive and investor pressure for startups to turn profits has increased.

Blue Apron, a leader in the sector when it began in 2011, saw its operations suffer when a new, automated facility failed to ramp up as planned last year. Orders went out late and without all of the promised ingredients, and costs grew.

Blue Apron said on Thursday that it continues to scale back marketing and deals as it sorts out expensive logistical problems, but the process has interfered with its ability to attract new customers.

Meal-kit companies increasingly are acknowledging the limits of e-commerce operations. Los Angeles startup Chef’d ceased operations last month after its complex online business caused it to run out of cash. Blue Apron officials said Thursday that it has struggled to get those visiting its website to become paid customers.

Startups now see supermarket sales as a potential bright spot, as shoppers often prefer to pick up ready meals rather than plan ahead with a subscription.

Blue Apron said Thursday that a pilot selling its boxes in Costco Wholesale Corp. expanded to around 80 locations in multiple regions from 17 in the Seattle and San Francisco areas when it began in May. Blue Apron is in talks with other retailers to carry their meals, as rival HelloFresh SE is also doing.

The switch to supermarkets and sales of a la carte kits online is a tough transition with uncertain profits, wrote RBC Capital Markets.

“The core business fundamentals remain negative,” the Wall Street firm said, cutting its price target for Blue Apron shares to $2 from $4.

For the second quarter, Blue Apron reported a net loss of $32.8 million, or 17 cents a share, compared with a loss of $31.6 million, or 47 cents a share, the previous year. The continued customer losses led revenue to fall 25%, to $179.6 million.

Analysts had expected revenue of $205 million for the period. Earnings per share were as projected.