This Part Of Amazon Is Badly Broken
Amazon's recent earnings report showed that while its North American e-commerce division and AWS cloud operations are performing well, its international e-commerce division is struggling. The company had revenue of $86.3 billion in North America, up from $76.9 billion the previous year, but only $31.9 billion internationally. The international division's operating income was $903 million, compared to $5 billion for North America. If the international division could improve its margins, Amazon's overall earnings per share would be better.
When Amazon (NASDAQ: AMZN) posts strong results, investors believe it is running on all cylinders. Based on the recent earnings report, it isn’t.
Many people think Amazon is made up of a US e-commerce division and its wildly successful cloud operations, known as AWS, the world’s leading cloud company.
Indeed, Amazon’s largest North American e-commerce operation had revenue of $86.3 billion in the most recently reported quarter, up from $76.9 billion in the same period the year before. Operating income was $5 billion, up from $898 billion. Because of their size, the North American e-commerce figures are sometimes considered a proxy for the entire e-commerce sector.
AWS revenue for the period was $25 billion, up from $21.4 billion in the same period the year before. Operating income rose from $5.1 billion to $9.4 billion. Amazon’s comments on the AI products AWS has developed were the primary reason the stock traded higher after earnings. It is not, as some investors worried, being left behind in the AI industry by Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG).
International e-commerce has never done particularly well for Amazon. In the most recent quarter, it had revenue of $31.9 billion, up from $29.1 billion. Its operating income was $903 million. At least it did not post a loss, which it sometimes does. Last year, it lost $1.2 billion in the quarter. Its operating margin was just over 2%.
Very few analysts have discussed the International e-commerce division when discussing Amazon’s success. They should. If it could have made the margins North America did, Amazon’s EPS would have been much better.
Sponsored: Want to Retire Early? Start Here
Want retirement to come a few years earlier than you’d planned? Orare you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
The post This Part Of Amazon Is Badly Broken appeared first on 24/7 Wall St..