Amazon.com has surprised many analysts with its profit report for Q2FY15. The e-commerce giant has done something very different to get itself in a very different postion which will be an example for many investors out there. Amazon reported revenues of $23.18 billion, up 20% YoY while analysts had projected revenues of $22.39 billion. Amazon said that the revenues would have been more than that if the currency was stable. The EPS for Amazon stood at $0.19 while analysts predicted a loss of $0.14 per share.
We can all see the improvement in Amazon’s operations as its cash flow from operations stood at $8.98 billion; up 9% YoY, CFO Brain Olsavsky characterised the wonderful performance to Amazon Prime customers and the product selection. He added that pace of international shoppers was more than the North American region.
Among the top growth segments were the Amazon Web Services, the cloud computing service that currently dominates the overall sectors. AWS revenue stood at $1.82 billion, up 81% YoY, this was perhaps a higher growth than the previous quarter when it grew by 49%.
The overall changes in the financial position were quickly incorporated by as Amazon’s share prices rose sharply and increased its market value by $40 billion. However, many analysts criticized that a company like Amazon that makes very less profit from its revenues, experienced an increase in its market value by $40 billion when its earnings were released. While Apple Inc., a company having a profit which is 20% of its revenues lost $50 billion in market value when its earning were about to be published. They argued that investors are not reacting according to the financial performance of companies.
Amazon’s chief Jeff Bezos has been committed to making investments into the business and enter into new areas, though he has not set profitability a condition. This means that Amazon can experiment to enter new areas of business such as smartphones or drones. He said: “If you’re going to take bold bets, they’re going to be experiments. And if they’re experiments, you don’t know ahead of time if they’re going to work. Experiments are by their very nature prone to failure. But a few big successes compensate for dozens and dozens of things that didn’t work.”