Amazon third quarter profits significantly lower than expected

Third quarter earnings at Amazon were lower than expected, and the online giant warned that the next quarter’s earnings will be hampered by labour market shortages and supply-chain problems.

On the one hand, online sales surged during the pandemic, but sales growth has slowed in recent months at the same time as the labour market has been squeezed and supply chain problems have made it difficult for Amazon to meet demand.

Sales over the quarter were $110.8 billion and profits were $2.3 billion, almost half the profit Amazon had in the same period in 2020. Market expectations were for a $4.6 billion profit in the quarter, suggesting a slower than expected growth on the part of the online giant.

Chief Executive Andy Jassy succeeded founder Jeff Bezos on the 5th July. He said, in the current quarter “we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimise the impact on customers and selling partners this holiday season,” Mr. Jassy said.

Among its other segments, the cloud computing business grew strongly with sales hitting $16.1 billion, a 39% growth on the same quarter in 2020. The digital advertising business is starting to become a threat against Facebook and Google, and saw revenues grow by 50% in the quarter.

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