Amazon's revenue increases even as spending rises

Thu Apr 24, 2014 7:19pm EDT
 
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By Deepa Seetharaman

SAN FRANCISCO (Reuters) - Amazon.com Inc's revenue grew more than expected for the first quarter, largely offset by a sharp increase in spending on technology, content and new warehouses as the e-commerce company branches into new businesses.

Amazon's international unit, which accounts for 40 percent of sales, continued to be a drag as sales growth slowed to 18 percent during the quarter. Global unit sales, a closely watched measure of how many items Amazon has sold, also decelerated, rising only 23 percent.

The company is investing heavily in new markets abroad, particularly China, where it faces tough competition with Chinese e-commerce company Alibaba.

"A lot of the things that we've done - making sure that we have the right pricing in place on behalf of the customers, making sure that our service levels are where we need them to be - those are the things we continue to work on in China," Chief Financial Officer Tom Szkutak said during a conference call.

"Is it a large investment? Yes, it is. And that investment has increased over the past several years."

Szkutak added that Amazon was "encouraged" by the weekly growth in Prime users, even after the company increased the price of the service by $20 last month.

Shares of Amazon, which is also aggressively expanding its lineup of devices and computing services to sustain its growth pace, were little changed in after-hours trading.

The Seattle-based company's first-quarter revenue rose 23 percent to $19.74 billion, boosted by North American sales. This bested the average Wall Street estimate of $19.4 billion, according to Thomson Reuters I/B/E/S. Amazon reported earnings per share of 23 cents, in line with expectations.   Continued...

 
A parcel moves on the conveyor belt at Amazon's logistics centre in Graben near Augsburg December 16, 2013. REUTERS/Michaela Rehle