The largest ecommerce company, Amazon (AMZN, Financial), has been an exemplary performer. Its shares have risen an overwhelming 17 in the last one month and continue to rise as the company performs really well. Its fourth quarter numbers were ahead of the Street’s estimates, enabling its share price to move north.
The gigantic results
The revenue of the company surged 15% to $29.33 billion, as compared to the previous year. Although the top line was slightly below the analysts’ expectations, it was good enough to impress the investors. Also, on an annual basis, revenue jumped 20% to $88.99 billion. Higher revenue was driven by higher demand for electronics and general merchandise, especially in North America. However, the media services segment was a laggard.
Demand in the Americas witnessed growth, whereas that in the international market was not up to the mark. Nonetheless, the company is investing heavily in the emerging markets in order to expand its business. Since ecommerce is highly competitive in the emerging markets, it will take some time to grow.
Amazon’s could services segment, called Amazon Web Services, registered growth. The segment has increased to $1.76 billion from $1.34 billion in the last year’s quarter. Amazon Web Services serves more than 1 million active customers and its usage has grown 90% over last year.
The ecommerce giant’s prime subscriptions rose 53% during the quarter. Despite an increase in the annual fees, there were more additions to the customer base in the International market than in the American market. Amazon now has 35-40 million Prime customers globally. Addition of Prime customers is a boon since they are willing to spend much more than the non-Prime customers. Therefore, it has invested heavily for Prime shipping and paid $1.3 billion for Prime Instant Video. These efforts should help in growing revenue further in the future.
The earnings of the company came in at $0.45 per share, much higher than the estimate of $0.17 per share. The bottom line was affected by factors such as foreign currency fluctuations and weakness in global economic conditions. But with the increase in consumer spending in the U.S., the bottom line is expected to improve.
Road ahead
Amazon recently announced the launch of its new products called WorkMail. It is a Cloud-based email and calendar service, specially designed for corporate customers. This new product is similar to Microsoft (MSFT, Financial) Outlook and Google’s (GOOG, Financial) apps for work. The users of WorkMail will be able to sync their mailboxes with any of the devices, including Amazon Fire, iOS, Android, as well as Windows phone devices.
WorkMail is developed by the company’s AWS division and offers services such as file storage services, called Zocalo. The ecommerce company plans to attract corporate clients and encourage them to shift to AWS services for all their office work, which has better encryption services and provides better control of the shared files. The company is also providing a 30-day trial for the software, and the customers will be charged $4 per month for $50 GB of mail storage, thereafter.
Bottom line
The company’s efforts to expand its business by coming up new products and services look interesting. However, with tough competitors, such as Google, already in the market it is difficult to say how things will shape up. Further, the company’s guidance for the year was slightly below the Street’s expectations. Nonetheless, factors such as a growing prime customer base, higher demand for its online services and its cloud services make Amazon an attractive pick.
