Amazon and Alphabet (nee Google) joined Facebook this morning, and to a lesser extent, Apple in reporting better than expected June quarter figures.
The shares of both giants rose in after hours trading – Amazon reported another quarter of better than expected sales, and earnings, and more of the same this quarter, Alphabet reported some of its best advertising figures for two years or more.
Amazon shares rose 15 in after hours trading and Alphabet shares were up 4.7%.
Amazon revealed a 31% surge in second half revenues to $US30.4 billion on the back of strong retail demand. That was well above market estimates for revenue of $US29.6 billion.
And the company is forecasting revenue of this quarter and profits in the very wide range of $US50 to $US650 million – this quarter will include its second Prime Day sale last week, which saw a 60% jump in sales on the first day in 2015.
Amazon is expecting sales of between $US31.5 billion and $US33.5 billion this quarter.
Amazon Web Services, the cloud computing business, again starred in the quarter, seeing a 58% surge in sales to $US2.9 billion. That made it the most profitable part in the company, accounting for more than half of operating income – $US718 million out of $US1.29 billion (under Generally Accepted Accounting Principles).
While AWS last quarter accounted for less than 10% of Amazon revenues – $2.89B out of a total of $30.4B – it brought in more than half of Amazon’s operating profit – $US718 million out of $US1.29 billion.
And a new part of the company – Amazon Business, which is trying to muscle into the small and medium business markets (where Office Depot/Staples operate) saw sales of $US1 billion for the quarter in its first year in business with a reported 400,000 customers.
Retail sales, which still account for the bulk of Amazon’s revenues, rose 29% during the quarter, especially outside North America. The after hours briefing from Amazon featured a lot of talk about the use of drones, again.
Meanwhile, Alphabet, the parent company for Google, ended market concerns about a slowdown in its core advertising business as it reported its fastest growth rate in two years and like Amazon (and Facebook) revenues and earnings well ahead of market forecasts.
Google makes up more than 99% of Alphabet’s revenues, saw a 21% jump in revenues to $US21.5bn, against the 17% market prediction.
Rapidly rising mobile usage continued to drive Google’s growth, with the number of times users clicked on its adverts, generating revenue for the company, up 29%from the June quarter of 2015.
Excluding payments to advertising partners, revenue was $US17.5 billion, against analysts’ estimate of $US16.86 billion.
Net profit for Alphabet surged to $US4.88 billion, from $US3.93 billion in the June quarter of 2015.
When you take Facebook’s advertising surge and that of Alphabet, you have to wonder how long print media – newspapers and magazines, and some parts of broadcast media can survive.
Note also that Amazon now has a new disruptive business – office supplies that will make a mess of older more established rivals, such as Office Depot and Staples. No wonder they wanted to merge earlier this eyar (but that was blocked by a judge). They can see a big Amazon bus coming that is going to smash into their sector.
