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Should Amazon Remain One Company?

Aug. 01, 2019 10:15 AM ETAmazon.com, Inc. (AMZN)23 Comments
Sramana Mitra profile picture
Sramana Mitra


  • Amazon's earnings missed estimates while revenue growth was strong. Its cloud segment AWS missed analyst sales estimates.
  • Amazon is relentlessly getting into new markets and is juggling several product lines: e-commerce, cloud, video streaming, offline stores, and so on.
  • It should explore whether it should continue to be one company.

Originally published July 29, 2019

Amazon (NASDAQ: AMZN) last week reported a mixed quarter. Its earnings missed estimates while revenue growth was strong. Its cloud segment AWS missed analyst sales estimates.

Amazon’s Financials

Amazon’s second quarter revenues grew 20% to $63.4 billion. Net income increased from $2.5 billion or $5.07 per share a year ago to $2.6 billion or $5.22 per share. Analysts expected earnings of $5.57 per share on revenue of $62.5 billion. Operating income increased to $3.1 billion, compared with $3 billion a year ago.

By segment, net product sales increased 12.5% to $35.8 billion and net service sales increased 30.9% to $27.5 billion. AWS revenues grew 37.7% over the year to $8.38 billion, missing analyst estimates of $8.5 billion. AWS generated operating income of $2.1 billion.

Revenue from subscription services like Prime increased 37% to $4.7 billion. Revenue from online stores grew 14% to $31.05 billion while revenue from physical stores, chiefly from its stores from the Whole Foods acquisition, was flat at $4.3 billion. Revenue from third party seller services including commission, fulfillment, and shipping fees grew 23% to $11.9 billion. Other revenue mainly from advertising grew 37% to $3 billion.

Amazon’s international sales grew 12% to $16.37 billion. However, losses widened 22% from $494 million to $601 million. North America net sales was $38.6 billion, up 20% and operating income was $1.5 billion, down 15%.

For the third quarter, Amazon expects sales to grow 17%-24% to be between $66 and $70 billion, compared to analyst estimates of $67.3 billion. Operating income is expected to be $2.1 billion to $3.1 billion, below estimates of $4.39 billion.

Amazon’s Acquisitions

Last month, Amazon’s video streaming platform Twitch is estimated to have paid up to $25 million for social networking platform Bebo. Founded in 2005, Bebo was acquired in 2008 by AOL for $850

This article was written by

Sramana Mitra profile picture
Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual accelerator that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, she writes the blog Sramana Mitra On Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, Mitra was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma. Sramana has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Full bio can be found at http://www.sramanamitra.com/bio/

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