Amazon posts biggest profit despite raging COVID-19 pandemic

Marco Green
July 31, 2020

Amazon itself had forecast that it might lose money in Q2 because it will spend close to $4 billion on purchasing protective equipment for its staff, and in expenses related to the Coronavirus.

Amazon.com, Inc. (NASDAQ: AMZN) reported quarterly earnings of $10.30 per share on Thursday. Earnings were $10.30 a share, beating analysts' average projection of $1.51 per share on sales of $81.2 billion, according to data compiled by Bloomberg.

Online store sales jumped 48 percent to $45.9 billion (roughly Rs. 3.42 lakh crores) in the second quarter. Amazon's forecast suggests the momentum will continue.

"Operating income is expected to be between $2.0 billion and $5.0 billion, compared with $3.2 billion in third quarter 2019".

The company has created 175,000 new jobs since March and is in the process of converting 125,000 of those roles into regular, full-time positions, Bezos said. "This guidance assumes more than $2.0 billion of costs related to COVID-19", said the company.

"Those expenses will start going away once Covid is behind us, which shows us the huge earnings potential of this model", Yarbrough said.

Shares of Amazon, the world's largest online retailer, rose 5 percent in after-hours trade. The company has also spent heavily hiring workers to help it keep up with the spike in online orders as well as on measures - temperature checks, masks, sanitizer - to protect frontline warehouse workers from COVID-19. Delivery and video services bundled with the company's loyalty club Prime are a key reason why customers subscribe to that program and do more of their shopping on Amazon. Revenue from Amazon Web Services (AWS), which sells data storage and computing power in the cloud, rose almost 29 percent to $10.81 billion (roughly Rs. 80,758 crores).

Amazon also posted a rare operating profit in its global business, which Olsavsky attributed to a step up in customer spending in Europe and Japan during the pandemic. "This really puts any concerns investors had about profitability to rest", said RJ Hottovy, analyst at Morningstar Inc. Amazon's employee count, not including contractors and temporary workers, reached 876,800 as of the end of the second quarter.

Other reports by Click Lancashire

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