Amazon growth slows, while profit margins expand

Thu Apr 25, 2013 7:20pm EDT
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By Alistair Barr

SAN FRANCISCO (Reuters) - Inc's revenue growth slowed in the first quarter as the world's largest Internet retail struggled overseas, but margins jumped on lower shipping expenses and the expansion of more profitable new businesses.

Amazon shares fell 1.9 percent to $269.43 in after-hours trading on Thursday following the results.

"The message there is North America was better than expected but international was softer. The question is ... 'Is this a reflection of macro trends in Europe, or is there something else going on there?'" said Telsey Advisory Group analyst Tom Forte.

Europe's lackluster economies are weighing on corporate sales in the region - even for fast-growing e-commerce businesses. EBay Inc, Amazon's main rival, reported disappointing results last week and noted European weakness.

Amazon's revenue rose 22 percent to $16.07 billion, propelled by growing sales of digital content, cloud-computing services and gains in its main retail business. But it was a decline from 36 percent growth in the first quarter of 2012.

International revenue rose 16 percent in the most-recent quarter, year-over-year, down from a 31 percent growth rate in the same period of 2012.

During a conference call with analysts on Wednesday, Chief Financial Officer Tom Szkutak was peppered with questions about slowing growth.

"There is some softness from a macro standpoint that others are seeing," the CFO said.   Continued...

A zoomed image of a computer screen showing the Amazon logo is seen in Vienna November 26, 2012. REUTERS/Heinz-Peter Bader