Once upon a time, toward the beginning of the commercial internet, critics questioned Amazon’s aggressive approach in throwing money at the concept of becoming the full-purpose seller of all types of products online. Indeed, while Amazon was growing along the way, it was in the red, far from turning a profit. Detractors believed that Amazon’s “Hail Mary” approach would fail, and the only question was when Amazon would go under, like many other early dot coms.
Well, who is laughing now? Amazon, and CEO Jeff Bezos, of course.
Wait for it … Amazon has turned a profit for the fifth straight quarter. And this past quarter, its profit margin was substantially increased. This is a very positive trend. Amazon staked its future on grabbing as much commercial selling “land” as possible on the internet. The volume of sales on Amazon daily is astronomical. Seeing that Amazon finally is profitable, and with its amazing positioning, the sky potentially could be the limit.
In terms of specifics, for the second fiscal quarter of 2016, Amazon’s posted profit was $857 million, which translates to $1.78 per share, on the back of $30.1 billion in revenue. These earnings easily exceeded Wall Street predications, according to TheVerge.com. Amazon’s profit reportedly has increased by 832 percent with increased sales of 31 percent. Not surprisingly, Amazon’s share price has climbed 40 percent in the past twelve months.
Amazon’s recent growth has been helped by its international efforts, cloud computing, lower logistical costs, free delivery for Prime subscribers, in addition to other features. Amazon reportedly is projecting sales between $31 billion and $33.5 billion for the current quarter. It appears that Amazon’s early investment in growth now is paying off and that Amazon truly is the sales marketplace beast on the Internet. Obviously when it comes to tech, things can change, but Amazon continues to try to stay ahead of the curve, and early rumors of Amazon’s demise plainly were premature, if not flat wrong.
Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. You can read his professional biography here. To receive a weekly email link to Mr. Sinrod’s columns, please email him at ejsinrod@duanemorris.com with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.