Amazon surprises with quarterly profit, stock rallies

Amazon.com Inc swung to an unexpected quarterly profit on higher sales in North America, its popular Prime subscription service and growing demand for its Web services, sending the online retailer`s shares up more than 17 percent.

Amazon surprises with quarterly profit, stock rallies

Amazon.com Inc swung to an unexpected quarterly profit on higher sales in North America, its popular Prime subscription service and growing demand for its Web services, sending the online retailer`s shares up more than 17 percent.

Amazon also forecast third-quarter revenue above estimates.

Sales in North America, the company`s biggest market, rose 25.5 percent to $13.8 billion in the second quarter from a year earlier, helped by strong demand for electronics and general merchandise.

Cloud-computing revenue soared 81.5 percent to $1.82 billion, accounting for nearly 8 percent of the quarter`s revenue, Amazon said on Thursday.

"Growth has been fuelled in large part by Prime growth and also (item) selection growth so it`s been a huge driver both in North America and international segments," Amazon Chief Financial Officer Brian Olsavsky said on a conference call with reporters.

Amazon Prime subscribers get free two-day shipping and exclusive access to certain movies, music and Kindle books. Amazon held its first Prime Day on July 15, touting it as a sales event rival to Black Friday, to attract more customers to the service.

Amazon declined to disclose Prime membership figures.

"It looks like they beat across every major revenue line," said Colin Sebastian, analyst with Robert W. Baird & Co. "That, along with the surprise profit beat, is icing on the cake, so to speak."

The company forecast net sales would grow 13 percent to 24 percent, to a range of $23.3 billion to $25.5 billion, in the third quarter. This is well above analysts` consensus estimate of $23.89 billion according to Thomson Reuters I/B/E/S.

Amazon estimated an operating loss of $480 million to an operating income of $70 million for the third quarter.

Amazon reported a profit of $92 million, or 19 cents per share, for the second quarter ended June 30, compared with a loss of $126 million, or 27 cents per share, a year earlier.

Revenue rose 19.9 percent to $23.19 billion.

Analysts on average had expected a loss of 14 cents per share and revenue of $22.39 billion.

Amazon shares traded at around $565 after closing at $482.18 on Nasdaq.

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