Amazon’s Net Income Jumps 153% in Fourth Quarter

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Mega merchant Amazon.com saw sales and income soar in the fourth quarter, led by its Echo devices and fulfillment expertise.

In a nutshell: Fueled by what it has called its “biggest holiday season” ever in 2017, Amazon posted a 150 percent jump in net income in the fourth quarter, as sales rose 38 percent. Amazon said it shipped more than 5 billion items with Amazon Prime worldwide in 2017, with more new paid members joining Prime in 2017 than any previous year, both worldwide and in the U.S. Fire TV Stick and Echo Dot were the best-selling products in 2017 across all of Amazon’s categories, with customers purchasing tens of millions of Echo devices last year.

Amazon noted that it has reviewed 238 proposals from across the U.S., Canada, and Mexico to host HQ2, the company’s second headquarters in North America, and has selected 20 metropolitan areas to move to the next phase of the process. Amazon expects to invest more than $5 billion and create as many as 50,000 high-paying jobs at its new second home.

During the year, the company hired nearly 130,000 employees globally. In the logistics end, Fulfillment by Amazon shipped billions of items for small and medium-sized businesses selling on Amazon worldwide in 2017.

[Read more about Amazon: Amazon Accounts for Half of Holiday E-Commerce Growth]

Looking ahead to the first quarter, Amazon said net sales are expected to be between $47.75 billion and $50.75 billion, or growth between 34 percent and 42 percent compared with the first quarter of 2017. Operating income is expected to be between $300 million and $1 billion, compared with $1 billion in the prior year first quarter.

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Sales: Net sales in the fourth quarter ended Dec. 31 increased 38 percent to $60.5 billion compared with $43.7 billion in the year-ago period. For the year, net sales rose 31 percent to $177.9 billion from $136 billion in 2016.

Earnings: Net income more than doubled in the quarter to $1.9 billion compared with net income of $749 million in fourth quarter 2016. The fourth quarter 2017 includes a provisional tax benefit for the impact of the U.S. Tax Cuts and Jobs Act of 2017 of approximately $789 million.

For the full year, net income rose 25 percent to $3 billion from $2.4 billion in 2016.

Operating income increased 69 percent to $2.1 billion in the quarter, compared with $1.3 billion in the year-ago period. For the year, operating income decreased 2 percent to $4.1 billion.

CEO’s Take: Jeff Bezos, Amazon founder and chief executive officer, said: “Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often—expect us to double down. We’ve reached an important point where other companies and developers are accelerating adoption of Alexa. There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers. Much more to come and a huge thank you to our customers and partners.”

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