The online retailer Amazon reported higher Q1 2014 profits and expenses. Profits increased 32% to $108 million, and revenue rose by 23% to $19.74 billion. Rapidly-rising expenses disappointed investors, but profits were better than expected.
Following the publication of the Q1 figures, shares rose by 5% in after-hours trading. Over the last twelve months Amazon shares have fallen by 15%.
Amazon founder and chief executive Jeff Bezos said:
“We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start. Our device team launched Fire TV, offering great content, including our recently announced exclusive deal with HBO, and innovative features like unified voice search, which we’re delighted is being adopted by so many new partners, including Netflix, HBO Go, Hulu Plus, Crackle and Showtime Anytime.”
“The team is working hard to keep Fire TV in stock. Our retail team launched Prime Pantry, a new option available only to Prime members offering exclusive access to everyday essentials in non-bulk sizes — ranging from breakfast foods and popular soft drinks, to cleaning and personal care items. And, our AWS team significantly lowered prices on EC2, S3 and RDS, saving AWS customers hundreds of millions of dollars over the next several months alone.”
Amazon.com, the world’s largest online retailer, is based in Seattle, Washington. It employs 109,800 people worldwide.
Amazon spending more on new offerings
Apart from its TV services, Amazon has been spending more on new potential offerings, as well as building new distribution warehouses, expanding Amazon Web services, and introducing new services such as a food-delivery program.
Earlier this week the online retailer introduced Prime Pantry, a grocery-ordering service that allows Amazon Prime customers order as much food and household goods as can fit into a 45-pound box for a flat delivery fee of $5.99.
Amazon has been testing its own delivery service, something that will give it much more control over its shipments.
Last month, the company said it would raise the price for new Amazon Prime customers in the United States by 25%, from $79 to $99 per year.
Below are the highlights of Amazon’s Q2 2014 guidelines:
- Net sales will be in the range of $18.1 billion and $19.8 billion, an increase of 15% to 26% versus Q2 2013.
- Operating income is expected to be between (minus) $(455) and (minus) $(55) million, compared to (plus) $79 million in Q2 2013.
Amazon and HBO announce video streaming deal
HBO and Amazon announced a video streaming video deal in which Amazon Premium customers will be able to watch HBO licensed movies, programs and documentaries. When the deal was announced, rival Netflix’ shares dropped 4.9%.
HBO said it is the first time it has licensed content to an online subscription streaming service. The service will be available to Amazon’s Fire TV customers as well, as from May 21st, 2014.
The deal does not include movies and shows that are less than 36 months old.
In an interview with Bloomberg, Colin Sebastian, an analyst at Robert W. Baird & Co., said of Amazon “They are still so early in their market opportunities that they will be in investment mode for many years. They are not a mature company that is trying to harvest earnings.”