Amazon Posts Another Blockbuster Profit

Just 5 years ago, as a freshman in college, I was alternating between Amazon and eBay to find the cheapest price for textbooks. This was the first time I ordered anything off of Amazon, and it was their bread and butter; a book. Fast-forward to present day and I order almost everything off of Amazon, even if I can get it at a store nearby. Why? Because products reviews have grown to be essential in my psychology for buying, and it's very easy to wait just two days for the product to arrive at your doorstep. And I haven't used eBay in years.

Quick article summary<p>&quot;For the second quarter, Amazon recorded an $857 million profit, or $1.78 a share, compared with $92 million, or 19 cents, a year earlier, as sales rose to $30.4 billion from $23.19 billion. Analysts were expecting a profit of $1.11 a share, according to the average estimate compiled by Thomson Reuters.<p>Amazon had forecast sales of between $28 billion and $30.5 billion.<p>Helping prop up results was the Amazon Web Services cloud computing division, which rents computing power to other companies. AWS increased revenue to $2.89 billion, up from $1.82 billion a year earlier. The unit appears on track to exceed Amazon Chief Executive Jeff Bezos’s goal of reaching $10 billion in sales this year.&quot;

This is the point where things begin to look really scary for every retail company not named Amazon. Amazon&#x27;s previous two decades of tiny profits have all been in service of building a massive logistics infrastructure (and locked-in customer base, via Prime) that no one else can touch, and now it&#x27;s paying off. It&#x27;s going to be very difficult to catch up to them - even if someone was willing to spend a lot of money to do it, Amazon could easily go back to the old regime of just reinvesting more into its operations; with these last three quarters, they&#x27;ve shown the naysayers that it can be made to pay dividends, and so I think Wall Street would be patient if they returned to that route.

So much for all those failed predictions in 2014 of amazon never being profitable, being a bubble, etc. Amazon&#x27;s cash flows are very strong, they have huge growth, and market dominance..whats what matters.<p>Amazon is the online version of Walmart but much bigger and much more potential...they are taking over retail, both online and offline...just amazing

If you look at their accounting statements. They made more money from AWS than their entire selling operation.

Q2 2016 earnings press release from Amazon: <a href="http:&#x2F;&#x2F;phx.corporate-ir.net&#x2F;phoenix.zhtml?c=97664&amp;p=irol-newsArticle&amp;ID=2189731" rel="nofollow">http:&#x2F;&#x2F;phx.corporate-ir.net&#x2F;phoenix.zhtml?c=97664&amp;p=irol-new...</a>

Got $99 from us with a Prime membrship.<p>NetFlix raising it&#x27;s monthly price to $10.99 and we only get a sub par library of content..<p>With Prime we pay less and get much more

Based on my understanding of Amazon&#x27;s strategy, this is bad news and it raises a lot of questions. The most charitable explanation is that they planned their spending poorly and were not able to match profits - an error which may be a fire-able offence since it could costs hundreds of millions of dollars.<p>Have they run out of ideas to invest in? Why are they suddenly changing strategy and forcing their investors to eat massive taxes on retained earnings?<p>Alternatively, are they saving up for some massive investment in the second half of the year?

Isn&#x27;t the war between AWS, Google, and Azure etc just a race to the bottom? Won&#x27;t these businesses just be complete commodities in the near future?

Amazon suppressed&#x2F;hid profits for so long.. not hard for them to show strong quarterly earnings. It was accounting then and it&#x27;s accounting now.