Amazon Profits Jump In Q3

Profits are flowing through even if not in sufficient volume to satisfy Wall Street.

The e-tailer posted net income of $252 million, or 52 cents per diluted share, for the third quarter ended September 30 versus $79 million, or 17 cents per diluted share, in the year-previous quarter.

Although results were in line with expectations and after two quarters when it significantly exceeded Wall Street expectations, Amazon fell well short of analyst estimates, including the 80 cent average published by MarketBeat.

Executives speaking in the company’s third quarter conference call noted that increases in expenses supporting key growth initiatives, including business development in India and production and marketing expenses in video, had weighed against income.

Net sales were $32.71 billion versus $25.36 billion in the year-earlier period, consisting of net product sales of $22.34 million and net service sales of $10.38 billion versus net product sales of $18.46 billion and net service sales of $6.9 billion in the 2015 quarter. Shifts in currency exchange rates resulted in a $52 million benefit to Amazon net sales. Operating income was $575 million versus $406 million in the quarter a year earlier.

Highlights of the quarter cited by Amazon included the expansion of its Alexa voice operating system with the addition of new capabilities and the roll out of the Echo Dot. The new Dot product, smaller and less expensive than the original Echo hands-free, voice-controlled Alexa base unit, rolled out in the U.S. with a $50 price tag. Amazon also launched Alexa, Echo and Dot to customers in the United Kingdom and Germany during the quarter.