There was a major change in market ranking on Wall Street this morning in the wake of the shock improvement in Amazon’s June quarter results. Amazon is now worth more than the mighty Wal Mart.
There was a major change in market ranking on Wall Street this morning in the wake of the shock improvement in Amazon’s June quarter results. Amazon is now worth more than the mighty Wal Mart.
An unexpectedly higher sales performance and rare profit (a moderate sales effort and loss had been forecast by the market), saw Amazon shares soar 16% and push the digital retail giant’s market value past that of Wal Mart, the world’s biggest retailer by sales and profits.
It was a case of Apple missed, Amazon delivered and stunning the market with a June quarter profit and higher revenues, when analysts had forecast a loss and relatively mild sales growth.
To top it off the company added a higher than expected revenue forecast for the third quarter, but a return to losses.
As a result of that market move, Amazon’s market value at the end of after hours trading reached $US263 billion, topping the $$US235 billion valuation of Wal Mart Stores, the world’s biggest bricks and mortar retailer (though with a growing digital presence).
Wal Mart sells more than four times more goods around the world than Amazon (close to half a trillion dollars in the current year against just on $US100 billion for Amazon, and is vastly more profitable.
Wal Mart even pays a dividend, Amazon offers shareholders capital gains.
Amazon said sales in its key North American market leapt 25% to nearly $US14 billion, and its cloud computing revenues surged more than 81% to $US1.82 billion – also much higher than expected.
Total revenue rose 20% to $US23.19 billion (the company is on track to top the $US100 billion annual sales target this year), and instead of a loss of 14 cents a share, it made a profit of 19 cents, or $US92 million.
For the third quarter, Amazon said it expects net sales of between $US23.3 billion and $US25.5 billion, compared with sales of $US20.6 billion in the third quarter of 2014.
The company also forecast operating income between a loss of $US480 million and a profit of $US70 million, which would be a considerable improvement on the loss of $US544 million in the September quarter of last year.
Coming after the weak result from Apple (yes, profits and sales were up, but not as much as expected and the outlook was weaker than expected). Amazon’s result is more in keeping with the better than forecast efforts last week from Google and Netflix and has again changed investor perceptions about the tech sector that were dashed by the softish result from Apple.
But the key result came from Amazon Web Services which reported an 81% jump in revenue and a big jump in operating profit for the second quarter in a row.
Amazon Web Services is Amazon’s pioneering cloud computing division. This report saw it reveal sales for just the second time in Amazon’s 20-year history.
Those sales rose to $US1.82 billion from $US1 billion a year earlier, and operating profit increased to $US391 million from $US77 million.
