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Amazon earnings narrowly beat bean counter expectations

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E-retail giant and cloudy king Amazon narrowly exceeded Wall Street expectations on Thursday, causing the stock to inch up in after-hours trading.

The company reported earnings per share of $0.23 and net sales of $19.74bn for its first quarter of 2014, exceeding analyst expectations, compared with EPS of .018 per share and net sales of $16.07bn in the same quarter a year ago.

Analysts polled by Yahoo! finance had expected net sales of $19.43bn and an EPS of $0.23.

During the quarter, Amazonlaunched the "Fire" set-top box to help it push its digital products (and shopping cart reach) into living rooms around the world, and inked a deal with HBO to get some of its shows onto its Netflix-rival "Lovefilm" service.

This follows Amazon spooking investors last quarter when it announced it was planning to raise the price of its quick-shipping "Prime" service by between $20 and $40.

This quarter, Amazon reported an operating income of $146m, down 19 per cent year-on-year with $181m in the same quarter a year ago.

"We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start," said Amazon's chief executive Jeff Bezos. As has become a habit, the mercurial boss then reeled off a list of the services and products created or discounted by Amazon during the period.

"Our device team launched Fire TV, offering great content, including our recently announced exclusive deal with HBO, and innovative features like unified voice search, which we're delighted is being adopted by so many new partners, including Netflix, HBO Go, Hulu Plus, Crackle and Showtime Anytime. The team is working hard to keep Fire TV in stock. Our retail team launched Prime Pantry, a new option available only to Prime members offering exclusive access to everyday essentials in non-bulk sizes — ranging from breakfast foods and popular soft drinks, to cleaning and personal care items. And, our AWS team significantly lowered prices on EC2, S3, and RDS, saving AWS customers hundreds of millions of dollars over the next several months alone."

Amazon expects to make between $18.1bn and $19.8bn in the second quarter of 2014 and is projecting a loss of between $455m and $55m.

The company's fulfillment costs – moving goods around warehouses and then onto consumers – climbed to $2.317bn, likely due to shipping costs with partners like USPS. Coincidentally, on Thursday the WSJ reported Amazon was testing out its own delivery network to help it bring down these costs.

Its "Other" revenue section, which contains revenues from its Amazon Web Services cloud division along with money made from advertizing and co-branded credit cards, grew to $1.204bn compared with $1.234bn in the typically strong fourth quarter of 2013. Analyst firm eMarketer reckons around $718.3m in ad revenues for 2013, and credit cards aren't thought to be as significant in revenues terms as that.

In March, Google made a significant price cut to its "Google Compute Engine" service, which competes with Amazon Web Services. In response, Microsoft and Amazon cut their own prices as well.

Purchases of property and equipment were $1.08bn compared to $880m in the previous quarter.

At the time of writing Amazon's stock was up about 2 per cent in after-market trading. ®

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