Amazon hikes Prime annual price to $119

Sheri Evans
April 27, 2018

Worldwide net sales, which were half that of North American sales, rose 34% - compare that to the 16% growth it saw in the first quarter of 2017.

Amazon's results bucked expectations that it would plow more profit into investments, as it has done in the past.

The average estimate of financial analysts, compiled by Thomson Reuters, was for revenue of $49.87 billion and earnings of $1.27 a share.

The January-March quarter saw Amazon launch its Prime music streaming service in India, after introducing its Alexa smart speakers in India, the skills for which have been growing significantly each month.

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Amazon shares rose 6 percent in after-hours trade, hitting a new all-time high, following the strong first-quarter results and the positive forward guidance. Sales, including more than $4 billion contributed by Whole Foods Market stores that Amazon didn't own a year ago, surged 42 percent, to $51 billion. This is the first time that the company has increased the cost of annual subscriptions since 2014. First quarter sales are up 43 percent to $51 billion, compared to a year ago. During an investor's call, Amazon CFO Brian Olsavsky said the paid subscription service was costing the company more to run.

The price increase is being made because "both the value of Prime and the cost to offer it have increased significantly", according to a statement from Amazon.

The research firm eMarketer said online commerce represents about 60% of Amazon's business but that it also will generate $3.37 billion in global advertising this year. It's the second straight quarter of accelerating growth for the profitable unit.

Amazon's cloud-based services, called Amazon Web Services, were a bright spot, with revenue up 49 percent to $5.4 billion. "We'll continue to invest in India where we're seeing great progress with both sellers and also customers".

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