Amazon's profit surges on cloud computing, advertising gains

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If you're an Amazon Prime subscriber, you've undoubtedly enjoyed the benefits of free two-day shipping, and it's most likely the reason you even subscribe.

CFO Brian T. Olsavsky slipped the bombshell news into Amazon's first-quarter earnings call, in an answer to a question about the company's expenses.

Amazon, which hooked shoppers on getting just about anything shipped in two days, said this week that it will soon promise one-day delivery for its U.S. Prime members on most items.

The three months to March 31 2019 also delivered operating income of US$4.4 billion ($6.27 billion), compared to US$1.9 billion ($2.7 billion) the year prior.

Amazon estimated that second-quarter operating income would be as much as $3.6 billion, short of the $4.2 billion analysts were expecting, according to FactSet.

Growth in those segments means more predictable revenue, a contrast to Amazon's retail business.

For now, it isn't clear when Amazon will complete the transition to the faster delivery time.

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On Thursday, Amazon announced first-quarter results with $2.7 billion in the advertising section of the report, up from $2 billion in the first quarter of 2018.

Amazon said it employed more than 630,000 workers during the first quarter, a 12 per cent increase from the year before. Now, with quarterly sales growth of less than 20% for the first time since 2015, shareholders are seeking greater profit. Offering faster shipping could encourage customers to stick with Prime. Amazon has not described in detail its thinking behind the bets. That has given investors confidence the company can continue to expand its profitability, even as fellow technology giants like Alphabet and Facebook see their margins narrow, Thill said.

As the company has grown, it has become a clearinghouse for smaller businesses.

In China, where the company had long struggled to compete with Alibaba Group Holding Ltd, Amazon said this month it would close warehouses and its domestic marketplace in July.

The company already offers one-day shipping to Prime members, but it is only available in certain markets and often comes with an additional cost.

The company forecast net sales of between $59.5 billion and $63.5 billion for the second quarter, the midpoint of which was below analysts' average estimate of $62.4 billion, according to Refinitiv data.

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