Amazon's profit takes enormous hit

American Amazon’s profit plummeted in the second quarter and is also lower than what analysts had predicted, despite a 25 % turnover increase.

High costs

Second quarter turnover grew 25 % from 30.4 billion dollars (26 billion euro) to 37.8 billion dollars (32.3 billion euro), outperforming forecasts which stood at 37.2 billion dollars (31.8 billion euro).

Its profit did not display the same positive evolution: it dropped an astonishing 77 % to 197 million dollars (168.4 million euro), 40 cents per share. Analysts had predicted a drop, but from 1.78 dollars per share to 1.41 dollars per share.

Amazon’s high expenses are to blame for the lower profit: overall costs grew another 50 % and CFO Brian Olsavsky believes these will only continue to soar in the second half of the year. It will for instance need to hire a lot of new employees. Forecasts indicate a 400 million dollar (342 million euro) operational loss in the third quarter, which would be the first time in more than two years that Amazon had to publish a loss.

Jeff Bezos is not the richest

The company’s weaker results have also impacted CEO Jeff Bezos’ wealth. Yesterday, Forbes declared he was the richest man on earth with 90.9 billion dollars (77.7 billion euro), just ahead of Microsoft’s Bill Gates. However, these quarterly results have also impacted the company’s shares, putting Bill Gates back on top.