Amazon shares surge as earnings beat expectations

Shares in Amazon leapt on Thursday after the online retail colossus reported it made a lot more money than expected in the first quarter of 2023.

Amazon reported a profit of $3.2 billion on sales that climbed 9 percent to $127.4 billion in the quarter.

The net income was about a billion dollars more than analysts had forecast, and Amazon shares were up more than 7 percent to $117.87 in after-market trades that followed release of the earnings figures.

"There's a lot to like about how our teams are delivering for customers, particularly amidst an uncertain economy," said Amazon chief executive said Andy Jassy.

"Our Stores business is continuing to improve the cost to serve in our fulfillment network while increasing the speed with which we get products into the hands of customers."

Jassy in March laid out a plan to cut 9,000 more jobs from the online retail giant's workforce, following the 18,000 that were axed in January.

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"Given the uncertain economy... and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount," Jassy said in a memo at the time.

The layoffs account for a smaller percentage of Amazon's total workforce, which ran up to 1.5 million people in December 2022, than the cuts seen at some other tech giants.

Amazon's Jassy told his workers that the extra layoffs were necessary as the company seeks a way to downsize after years of sustained hiring.

This was largely caused by the coronavirus pandemic when users in Amazon's major markets turned to the internet for shopping and entertainment, in a massive boost to the Seattle-based company.

The layoffs are part of the giant's cost-cutting campaign that also saw a pause in plans to open a new company headquarters in the Washington, DC area, though the company said this was only a temporary measure.

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Amazon's AWS cloud computing unit saw revenue climb 16 percent to $21.4 billion, but costs ate into operating income, which tallied $5.1 billion as compared to $6.5 billion in the same quarter a year earlier, according to the earnings report.

"Amazon's stronger-than-expected performance for its key profit centers of AWS and advertising indicate that the enterprise and the digital ad sectors may be turning the corner," said Insider Intelligence principal analyst Andrew Lipsman.

"For the first time in several quarters, Amazon may finally have a bit of wind at its back," he added.

"While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritize building long-term customer relationships," Jassy said.

Source: AFP