Amazon Q2 Shares Increase But Kindle Fails To Advance Profits - Dispatch Weekly

July 31, 2016 - Reading time: 2 minutes

Amazon is set to report its Q2 earnings for the second quarter of fiscal year 2016 – and will face no problems in doing so.

The company has been surpassing financial targets recently, thanks in main to cloud computing service Amazon Web Services (AWS). AWS revenue exceeded expectations by 28% last quarter (Q1), reaching $2.57 billion. During this Q2 period, Amazon has yet again outstandingly met and outshone its targets with AWS revenue up 58% to $2.89 billion.

Analysts predicted $29.54 billion more in revenue and a total earning of $1.11 per share. In total, $30.4 billion in revenue and earnings of $1.78 per share were made. In the past year Amazon’s stock is up 40%.

Not all has been profitable through the company, however. Q1 2016 saw Amazon claim to sell more than twice as many Kindle Fire tablets as Q1 2015, however many analysts believe tablet sales like the Kindle, still fail to be a profitable sale.

It is highly likely that Amazon breaks even at best, or worse, loses money on Kindle sales. If any marginal profit is to be made on tablet sales, in comes thanks to advertising and e-books.

The performance of tables shouldn’t reflect Amazon’s performance however, as this was their fifth-straight profitable quarter.

AWS on the other hand, produces massive profits for the company. Provides storage services to the likes of Netflix, Spotify and General Electric, its Q1 revenue and operating income were both up 64% and 170% respectively. Overall, AWS accounted for 56% of profit at Amazon last quarter.

According to an estimation from Independent analyst company Canalys this week, “AWS accounts for 30.4 percent of the total cloud infrastructure services spending.”

An Amazon executive commented on this, saying:

“We’ve been in this business longer than anyone. That said, there is plenty of room for multiple winners in this business.”

AWS, along with Google Cloud, Azure and IBM own 60.5 percent combined of the fast-growing $9.5 billion market, Canalys reported.

DW Staff

David Lintott is the Editor-in-Chief, leading our team of talented freelance journalists. He specializes in covering culture, sport, and society. Originally from the decaying seaside town of Eastbourne, he attributes his insightful world-weariness to his roots in this unique setting.