Amazon and Starbucks report higher than expected profits

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Amazon surprised the markets by actually reporting a profit of $92m for the three month quarter to June and by forecasting further growth in revenues and profitability for the rest of the year.

Strong sales and profitability growth was driven the performances of the company’s Prime two-day unlimited subscriber shopping service and from its cloud computing division, Amazon Web Services, which now accounts for 8 percent of group revenues.

The company’s share price jumped by 17 percent, which has pushed its market value higher than WalMart, previously the US’s largest retailer by market value.

Amazon's failure to translate strong market performance into profits has been a longterm source of concern for investors.

In the past CEO Jeff Bezos has invested heavily in a series of new ventures including a delivery drone devision, cloud computing and video streaming at the expense of reporting quarterly profits.

Meanwhile Starbucks reported a 22 percent increase in net earnings to $627m for the second quarter, driven by its new mobile and order and pay service at 4,000 US outlets which helps people avoid queues as they get their caffeine fix.

Sales at coffee shops which have been open for 13 months or more grew by 7 percent - with some 23 million more transactions taking place than during the same period 12 months ago.

Chief executive Howard Schultz commented on the results and the role that mobile technology played in its strong performance: "In those stores where mobile order and pay has been deployed, lines are shorter, service is faster and in-store operations are more efficient."

 

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