Amazon blew past analysts’ predictions, reporting $192 million in profits for the first quarter of 2012, and earnings of $0.28 per share, about four times that of Wall Street analysts’ predictions. The online retail giant also reported $13.2 billion in net revenue for the quarter.
Amazon has been fueled by spectacular sales of its Kindle range of e-reader devices, particularly its Kindle Fire, a $199 tablet that runs on the Android operating system but with Amazon’s store and content applications integrated tightly with it. But it is believed that the real growth is coming from content and store sales from its Kindle devices, as customers transition from print to digital reading.
Indeed, Amazon reported a jump in revenue from its e-books and other electronic content, though keeping in line with its usual practice, refused to give any numbers.
Amazon’s foray into cloud computing, Amazon Web Services, is also growing rapidly. Industry analysts – and an IDC report – have predicted that Amazon’s cloud computing services are reaching a $1 billion a year run-rate and an estimated 10% to 20% profit margin, much higher than Amazon’s wafer-thin margins on its retail and other services.
Amazon’s shares shot up by at least 15% in after-hours trading after it announced its results. Investors have shied away from Amazon stock in recent quarters as the online retail giant has delivered razor-thin profit margins which are much lower than the rest of industry as it invests in growth.