Amazon Misses Q3 Expectations, But Doubles Web Services Operating Profit

Amazon’s cloud services were a bright spot in the company’s otherwise cloudy third-quarter reported profits, which failed to meet analyst’s expectations. 

Amazon shares dropped after trading on Thursday after the company reported revenue of $252 million on its earnings call, which calculates to 52 cents per share. This is a jump year-over-year from the 17 cents per share gained in third-quarter 2015, but it failed to reach the expected 85 cents-per-share marker. 

Amazon’s overall operating income was reported as $575 million, a financial result largely bolstered by Amazon Web Services (AWS). AWS reported an operating profit of $861 million -- doubling its profit generated year-over-year from $428 million in third-quarter 2015. Total revenue for AWS rose 55% to $3.2 billion year-over-year.

First launched in 2006, AWS is an on-demand cloud computing platform hosted by the retail giant. It provides cloud storage and online computing services for a large host of companies, including Netflix and Comcast. 

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Earlier this month, AWS announced a partnership with another cloud power player, VMWare, a software company that provides cloud and virtualization services. The resulting new hybrid cloud offering, VMWare Cloud on AWS, leverages VMWare’s software on AWS’ cloud infrastructure.

Global public cloud spending is expected to more than double over the next four years, hitting an estimated $195 billion in 2020 according to the IDC. The research firm predicts cloud spending will continue growing at a compound annual growth rate of a remarkable 20.4% from 2015-2020. 

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