Amazon.com Inc. (AMZN) Thursday reported a first-quarter profit that fell short of estimates, however, revenues trumped expectations. Shares of the online retail giant slipped nearly 5% after the company said it expects to spend its entire $4 billion operating profit in second quarter on coronavirus-related expenses.
Seattle, Washington-based Amazon’s first-quarter decreased to $2.54 billion or $5.01 per share from $3.56 billion or $7.09 per share last year. On average, 44 analysts polled by Thomson Reuters expected earnings of $6.25 per share for the quarter.
Amazon’s sales for the quarter increased 26% to $75.45 billion from $59.70 billion last year. Analysts had a consensus revenue estimate of $73.61 billion for the quarter.
Sales from North America jumped 17 percent to $46.13 billion from $ 35.81 billion last year, while international sales rose 9 percent to $19.11 billion from $16.19 billion. Meanwhile, revenues of Amazon Web Services, Amazon’s cloud service division, jumped 41 percent to $10.22 billion.
Looking forward to the second quarter, the company expects sales of $75.0 billion to $81.0 billion. Analysts currently estimate revenues of $77.99 billion.
Second quarter profit will be impacted by higher operating expenses, as CEO Jeff Bezos said that the company will spend its entire $4 billion operating profit on coronavirus-related expenses in the second quarter.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities,” said Bezos.
AMZN closed Thursday’s trading at $2,474.00, up $101.29 or 4.27%, on the Nasdaq. The stock, however, slipped $119.00 or 4.81%, in the after-hours trade.
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