Amazon returns to profit as holiday sales soar

The company will break out Amazon Web Services sales next quarter, it said

The holiday season proved to be a good one for Amazon, which reported a jump in sales for the last quarter and a return to profit.

Sales jumped 15 percent from a year earlier and Amazon reported a profit after two straight quarters of losses. It's earnings blew past expectations, causing its stock to jump more than 14 percent in after-hours trading.

Amazon also revealed that it will break out its revenue from Amazon Web Services in its next earnings report, something it hasn't done in the past.

The news Thursday wasn't all good. Net income for the quarter, which ended Dec. 31, declined 11 percent from a year earlier, to $214 million. But its earnings of $0.45 per share were much higher than the $0.18 analysts had been expecting, according to Thomson Reuters.

Total revenue was $29.33 billion, up from $25.59 billion in the fourth quarter of 2013.

One of the strongest growth areas for Amazon has been its Prime subscription service, which offers discounted shipping and video streaming. Prime subscriptions climbed 53 percent last year, despite a price hike for the service, Amazon said.

Sales from its e-commerce business were $20.6 billion, up from $17.1 billion a year earlier. Media sales, including videos and books, declined from $7.2 billion to $6.95 billion.

It's "other" segment, which is primarily revenue from Amazon Web Services, reported sales of $1.7 billion, up from $1.2 billion.

With Amazon Web services, "We remain heads down focussed on driving a better customer experience," CFO Thomas Szkutak said on a conference call with investors.

Amazon offers an increasingly broad range of products and services, including an e-commerce site, video streaming, cloud computing, e-book readers, tablets and phones.

In the past quarter it introduced the Fire TV Stick, which lets people stream video to their televisions, and a free photo storage service called Prime Photos. It also has a local delivery service, called Prime Now, which has begin offering one and two hour deliveries of goods in Manhattan, with plans to expand to other cities soon.

For AWS it introduced a database service called Aurora, a compute service for building Web applications called Lambda, a software development service called CodeDeploy, and a virtualization service called the Elastic Cloud Compute Container Service.

Amazon also reported its full-year results Thursday. Sales grew by 20 percent from 2013 to $88.99 billion, but the company lost $241 million in 2014, compared to a $274 million profit in 2013.

For the first quarter of 2015, Amazon expects sales of between $20.9 billion and $22.9 billion, an increase of 6 to 16 percent from a year earlier.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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Joab Jackson

IDG News Service
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