Weak Amazon, Alphabet results spark growth worries

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In its third quarterly earnings report, Amazon reported that net sales in the past three months have totaled $56.6 billion, which is a 30 percent year-over-year increase.

Analysts were predicting that on a per-share basis, Amazon's profit would be six times larger in the period than it had been in the same quarter a year earlier.

Its operating profit forecast of between $2.1 billion and $3.6 billion also came in below consensus estimates.

The company showed slowing revenue growth in all categories quarter over quarter, including online sales and subscription sales, Amazon Web Services sales and its fast-growing advertising business.

"Alphabet is the ad revenue king, so any softness makes people nervous", said independent technology analyst Rob Enderle.

While US economic growth kept apace despite trade wars, the same can not be said of USA corporate profit growth, as a slew of disappointing forecasts this earnings season showed how tariffs, rising wages and borrowing costs as well as jitters over geopolitical events are hurting companies.

Despite the lower-than-expected revenue Amazon's finance chief Brian Olsavsky said on a call with reporters Thursday: "We feel it's a really strong quarter".

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Our earlier story this week predicted Amazon's shares would begin to enter a bear market by falling 21% off their high, but Amazons' outlook has significantly deteriorated since then. Additionally, analysts have slashed their earnings outlook for the fourth quarter by 9% to $5.35 per share. In the third quarter past year, Amazon pulled in $43.7 billion in sales. The Street wanted to hear $73.79 billion, but Amazon forecast between $66.5 billion and $72.5 billion.

"AMZN posted generally positive Q3 results-In-line Revenue with the highest Gross Margin we have seen in any third quarter & record high Operating Margin", a team led by the RBC analyst Mark Mahaney said in a note sent out to clients after the results.

Amazon's employee base is up 13 percent over a year ago. This is pretty impressive considering Amazon's primary North American retail segment pulled in over $34 billion in sales yet AWS booked just shy of $6.7 billion! A big reason behind that was the absorption of Whole Foods Market and the 87,000 people who work there.

The company now groups its advertising group under "other" on its balance sheet.

That's a 21 percent increase compared to the same time previous year. Its "other" revenue, which largely comprises advertising sales, jumped 122% to $2.5 billion.

Amazon's stock closed regular trading up $US117.97 a share, or 7.1%, to $US1,782.17.

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