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Wednesday November 22nd, 2017 4:52PM

Amazon shares soar as earnings beat expectations

By The Associated Press
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NEW YORK (AP) — Amazon posted third-quarter earnings that far surpassed Wall Street expectations, helped by the acquisition of organic grocer Whole Foods and an increase in sales during its summer "Prime Day" promotions.

The company also said Thursday that it expects sales to rise during the busy holiday-shopping season. Its shares soared 8 percent in extended trading after releasing the results.

Amazon has been busy in the past few months: It gained 465 physical stores after it paid nearly $14 billion for Whole Foods; it announced a series of new voice-activated Echo devices; and it kicked off a public hunt for a place to build its second headquarters.

It now employs more than 540,000 people, a 77 percent jump from a year ago, with some of that growth coming from the Whole Foods acquisition. But the company said it has been also hiring software engineers, sales representatives and others to work on its cloud computing business, video streaming service and its devices.

Founder and CEO Jeff Bezos touted the popularity of its Echo devices in a statement, and pointed out that it launched five new voice-activated gadgets in the last month. "Customers have purchased tens of millions of Alexa-enabled devices," he said.

But other executives on a conference call with analysts Thursday were less chatty about Amazon's possible future endeavors: They declined to answer questions related to news reports that the company may open pharmacies at its Whole Food stores or start to sell medicine online.

Overall, Amazon reported net income of $256 million, or 52 cents per share, for the three months ending Sept. 30. That easily beat the 2 cents per share analysts had expected, according to FactSet. Amazon has long been known for investing the money it makes back into its businesses, such as opening new warehouses to fulfill orders. Many seemed to expect that again.

Revenue rose 34 percent to $43.47 billion, beating the $41.58 billion analysts expected. The company said net sales included $1.3 billion from Whole Foods Market, which Amazon acquired on Aug. 28. After taking over Whole Foods, Amazon slashed prices, added its logo on signs and set up a stand of "farm fresh" Amazon Echo voice-assistant devices by store entrances.

The company attributed the revenue jump to its third annual Prime Day in July, when it offers discounts to its Prime members to boost sales. Amazon doesn't disclose how many Prime members it has, but it said revenue from its subscription services, which includes those who pay $99 a year for Prime, grew 59 percent from the year before.

For the fourth quarter, which includes the holiday season, the company expects revenue between $56 billion and $60.5 billion, up as much as 38 percent from the year before, and above what analysts expected. It expects to hire more than 120,000 temporary workers to help pack and sort orders for the holidays, the same number it hired last year.

Amazon has been working on ways to make shopping with it so easy that shoppers don't go elsewhere. Next month it will launch a service called Amazon Key that will let people in some markets get their packages delivered inside their front doors. It has taken up space inside some Kohl's department stores, where it sells Echo devices or lets customers drop off Amazon returns for free. And it has installed lockers at Whole Foods locations where shoppers can pick up orders or drop off returns.

The company is also in the midst of choosing a place to build a second headquarters, since it has grown too big for its Seattle home. It is sorting through 238 proposals from cities and regions across North America that want to land the promised 50,000 new jobs and construction spending of more than $5 billion. Amazon plans to announce a decision sometime next year.

Shares of Amazon.com Inc., which are already up 30 percent this year, rose $77.67 to $1,050.10 in after-hours trading Thursday.

____

Contact Joseph Pisani at http://twitter.com/josephpisani

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, Top U.S. News short headlines, AP Business, AP Business - Corporate News, AP Technology News
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