Listen: Amazon’s Fiscal Discipline Pays Off as It More Than Doubles Profit
"This is tech news briefing from the Wall Street Journal. Welcome. I'm Tanya boost reporting from the newsroom in New York, and if you were wondering, no, there is no end in sight for Amazon. The end of last week, it delivered a double punch, doubling its profit and delivering its best revenue growth in more than six years. It also topped one billion dollars for the second straight quarter. Now that the dust has settled. I look at how Amazon's fiscal discipline pays off. But first, these Tai Chi Binz. The race for five G the next generation of wireless tech is heating up sooner than anyone expected that is promising to benefit to struggling Nordic telecom, equipment makers, Ericsson of Sweden, and Finland's Nokia said in the past week, that U S wireless carriers are planning to upgrade their networks sooner than expected, which would boost both companies, long declining equipment, sales US wireless carrier should start significant spending on five G equipment in the second half of two thousand eighteen carriers originally weren't expected to spend heavily on five G until twenty nineteen. Or later Microsoft continues to ride the strength of its cloud and signals more to come as well the cloud business as your jumped ninety, three percent in the fiscal third quarter, the company has never grown slower than ninety percents since it began reporting the metric in October two thousand fifteen. That growth has propelled Microsoft into the role of chief cloud rival to Amazon, which pioneered the business a decade ago and the crypto crime. Wave is here from stick ups to drug deals to white collar scams, crypto, currency related crime is soaring, and law enforcement is scrambling to keep up. How bad is it? Blockchain intelligence group estimates, legal activity accounts for about twenty percent of the transactions of five major crypto currencies, including bitcoin. Read more about the journal's coverage of the weird world of crypto crime at wsj.com coming up, Amazon sees its best growth in more than six years where it goes from here. This is the Wall Street Journal tech news briefing. Amazon currently commands roughly forty, three cents of every dollar spent online these days. The company delivered a sucker punch late last week, doubling its profit. Let's get right to the details. Joining us now from San Francisco with more is the Wall Street Journal's Laura Stevens, hey high. Now this Amazon's best revenue growth in more than six years, right, right. Will revenue was up forty three percent, which is a big increase to about fifty. One billion dollars profit was also really high. So analysts had been expecting that the company might report somewhere around one twenty-six earnings per share. It was actually more than double that. So they really beat on expectations. That was our second quarter in a row with more than a billion dollars in profit, which for Amazon is is just a company famed for pouring investments back into the company and not really returning much to shareholders. So it was very interesting quarter and stocks are up to prove it. Yeah. I mean, you mentioned investors. And you know earnings always surprise investors or not so much, and we always expect Amazon's do well, but did this even have investors kind of surprised? It definitely did. Jeff Bezos has been super prompt with his shareholders since nineteen Ninety-seven when he wrote his first shareholder letter saying that they would pour money back into the company and they'd be making investments and that they would always be thinking about the long term. So the fact that the companies actually, you know, for several street quarters in a row has made money, and then also that they're actually kind of posting these bigger profits, which still are pretty small in the grand scheme of things. We're Facebook or Google or another tech giant. It's definitely something that's starting to impress investors, right? As we always talk about their so many different hands in so many different pots, let's talk hardware any, you know, because all the tech giants are putting a lot of eggs in that basket. Have we learned more from Amazon about their future plans? Let's start with hardware the echo and beyond what we hear from Jeff Bezos or anything from Amazon regarding their plans. They did say that they're gonna be pouring more money investing in these device. Recently, the company has said that they've had incredible success with selling echo devices with the adoption of Alexa, which is their artificial intelligence assistant, and they have a huge advantage. They were first to market essentially in this space with smart speaker. So back in two thousand fourteen was their first launch of the echo, and now Google's come out with the home assistant with their own speaker. Apple just launch the home pod. Amazon still manage to kind of keep a big lead there. So a lot of analysts are impressed with that. And speaking of competition, we were just talking about the cloud in the headlines, Microsoft is moving in on Amazon's territory. It's another big beacon of success for Amazon, something that it kind of spearheaded an early days, what's new, any anything we know by way of its plans in that area. That was one of the more impressive segments Assad growth for the quarter. So revenues are way up. It really beat out analysts expect expectations again in part because a lot of people have thought that this competition with both Google Microsoft other companies that are getting into the cloud space would really start. Chip away at AWS's dominance, Amazon web services division. This this quarter, it's facing a lot more competition as you mentioned for Microsoft and from Google from other cloud service providers. Amazon did if essentially invent the space more than a decade ago and they've had a huge lead time, and it was something that Jeff Bezos called out in his in the press release that the company sent out about earnings saying that AWS had had this huge headstart in it was just definitely doing gangbusters. Essentially, it's always interesting what Jeff Bezos decides to call out in that was the division that he really decided to say that the team has not stopped working that they've had this huge momentum of growth because they were first to the space, but they they're continuing to dominate there and jumping on onto that. Let's talk about something that perk Myers up. Amazon will raise primes annual price by twenty bucks to one hundred nineteen dollars. That was interesting. So this is the second price increase in the whole programs. Thirteen year history. Yeah, that was. An interesting when they dropped it into the conference call, do not put into the press release and they decided to bring up that they were going to be increasing the price. They cited the cost of offering prime that back when it started in two thousand five when it was still just seventy five dollars annually. But it was essentially two day shipping at that point. Now they've added video, they've added music, they've added all different kinds of content and different things that you can access via. They're also adding a lot of really fast delivery options which are really costly. So prime now is there one in two hour delivery service which you can get whole foods from, and then they have a lot of free will unlimited with prime same in one day shipping. So those are main reason for increasing the price. It remains to be seen. It was ninety nine dollars previously not will be one nineteen remains to be seen if consumers are willing to pay that much for essentially two day shipping. That was my one issue of concern. They're on a personal level. But anyway, you know, as usual, there's no one in sight right Amazon expects and predicts more sucker punches more. Or doubling more gang BUSTER behavior here, right? There are definitely predicting a good second quarter. They're expecting operating income to potentially more than double to as much as one point. Nine billion which is not profit, but still a good measure of how profitable their next quarter might be. We've it at that for Stevens. Thank you as always thank you or Stevens covers everything about Amazon for the journal. You can head to wsj.com for the very latest. They'll do it for the tech news briefing im, Tanya boost does reporting from the newsroom in New York. Thanks for listening."