Amazon.com's Profit Disappoints Analysts

By Cindy Waxer April 27, 2011

The results are in. Amazon.com reports that its net income decreased 33 percent to $201 million in the latest quarter, compared with net income of $299 million, in first quarter 2010. That dip, prompted by Amazon’s investments in expanded operations and warehouse capacity, comes as a disappointment to industry analysts.

According to Thomson Reuters I/B/E/S, Wall Street analysts anticipated that Amazon would report a first-quarter profit of 61 cents per share – a drop from 66 cents last year. However, they also expected $9.51 billion in sales – a 33.4 percent spike from last year.

In actuality, Amazon.com’s net sales increased 38 percent to $9.86 billion in the first quarter, compared with $7.13 billion in first quarter 2010. And Amazon continues to enhance its products and services.

“In the last 90 days, we announced Kindle with Special Offers, Kindle Library Lending, Audible audiobooks on Kindle, Appstore for Android, Amazon for Windows Phone 7, Checkout by Amazon in both Germany and the U.K., a Kindle Store in Germany, Cloud Drive, Cloud Player, and Prime Instant Video - just to call out a few of the things we've been working on," said Jeff Bezos, founder and CEO of Amazon.com, in a statement. "We love inventing on behalf of customers and have never been more excited about the long-term opportunities."

Nevertheless, in recent weeks, Amazon has missed the opportunity to prove its investments in cloud computing a worthwhile endeavor. As reported by TechZone360.com, just yesterday, Amazon got its cloud computing services, Amazon Web Services (AWS) and Elastic Compute Cloud (EC2), back up and running after nearly a week-long outage. According to Amazon's AWS status dashboard, the problems began around 1:41am PT when sites such as Foursquare began experiencing delays and errors when connecting to Amazon’s cloud computing servers.

For all the cost savings and convenience promised by cloud computing services such as Amazon’s AWS, there has been widespread criticism of the pay-as-you-go technology.




Edited by Rich Steeves

TechZone360 Contributing Editor

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