Amazon.com (AMZN) - Get Report salvaged the FANG stocks' performance after Facebook's disastrous report and Netflix Inc.'s (NFLX) - Get Report disappointing subscriber growth. The e-commerce and cloud giant reported GAAP EPS of $5.07 versus consensus estimates of $2.48, although Q2 revenue of $52.89 billion fell short of analyst expectations of $53.37 billion. TheStreet's tech columnist, Eric Jhonsa, and Jeff Marks and Zev Fima, analysts with Jim Cramer's Action Alerts Plus portfolio, which owns Amazon, are live blogging the company's earnings report and call with analysts, which is scheduled for 5:30 p.m. ET. Please share your questions and comments in the space at the top of the blog window.<doc-sep>Amazon earned $5.07 per share in the second quarter, compared to the $2.48 per share analysts were expecting. Shares of Amazon Inc. (AMZN) - Get Report rose more than 2% after hours Thursday after the company reported quarterly earnings of $5.07 per share on revenue of $52.89 billion. TheStreet is live blogging Tesla's earnings release and call with analysts. Please join us! Analysts were expecting the company to report a 41% increase in revenue to $53.4 billion on earnings of $2.48 per share. The company expects to report net sales between $54 billion and $57.5 billion in the third quarter, up from the $37.96 billion it reported a year ago, but short of the $58.03 billion analysts are expecting for the period. Amazon noted, however, that currency will have an unfavorable 0.3 percentage point impact, which likely wasn't factored into some analyst estimates. AWS revenue rose 49% year-over-year to $6.11 billion, matching Q1's growth rate and topping a consensus estimate of $5.98 billion. In addition to AWS's performance, Amazon's EPS got a boost from the fact that the North American segment's operating income, which has been pressured by heavy spending, more than quadrupled to $1.84 billion. Amazon is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN? Learn more now.<doc-sep>Bloomberg (Bloomberg) -- Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel tycoon Sanjeev Gupta as they channeled $1.2 billion of client funds to his businesses, according to people familiar with the matter.Bankers in Credit Suisse’s commodity trade-finance unit blacklisted Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate, the people said. When they learned about two years later that the bank was lending to his companies through a suite of investment funds, which eventually grew to $10 billion, they flagged their worries to leaders in compliance and the division that housed the loans, one of the people said.The disclosure that Credit Suisse may have put clients at risk despite internal concerns over Gupta’s businesses adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship.Investigations, LawsuitsThe U.K. Serious Fraud Office is now investigating Gupta’s group of companies for suspected fraud, including in its financing deals with Greensill, according to a May 14 statement. Credit Suisse has sued to force Gupta’s Liberty Commodities into insolvency and has since shut the funds that made the loans and launched an internal investigation. Investors are staring at losses as the bank confronts embarrassing lawsuits.“We are currently focusing our efforts on recovering our investors’ money,” Will Bowen, a spokesman for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal probe will focus on “all of the issues” linked to the funds. “We are committed to learning the lessons and will share the relevant lessons learnt at the appropriate time.”Andrew Mitchell, a spokesman for the Gupta Family Group Alliance, or GFG Alliance, a collective of businesses linked to Gupta including Liberty Commodities, denied any wrongdoing.The Greensill saga represents just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began unraveling, the bank has announced a $5.5 billion hit from the blowup at Archegos Capital Management.ApologiesFormer Chairman Urs Rohner apologized to shareholders and his successor, Antonio Horta-Osorio, who arrived at the end of April, has promised a sweeping strategy review.Chief Executive Officer Thomas Gottstein, who was head of the division that oversaw trade finance, wasn’t aware of the internal concerns about Gupta that had prompted the bank to cut him off, according to a person familiar with the matter.Employees at the trade-finance unit, which lends money for the buying and selling of commodities, cut ties with Gupta in 2016 after becoming skeptical toward his Liberty Commodities, the people said. They distrusted the documents the company provided, triggering doubts about its transactions, they said. In one example reported by Bloomberg, the company had presented another bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.Banking TiesLiberty Commodities pledged assets to Credit Suisse as security for borrowings in 2013 but by early 2016, all such commitments had been extinguished, indicating that the financing relationship had ceased, U.K. Companies House filings show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it didn’t in the following year’s report, which is dated May 2016, according to the filings.Their counterparts at other banks, including Macquarie Group Ltd. and Sberbank PJSC, halted trading with Liberty Commodities around the same time because of similar concerns; Goldman Sachs Group Inc. also stopped in 2016, Bloomberg has reported.Nevertheless, executives at Credit Suisse’s asset-management division -- which creates investment products for clients and charges a fee for overseeing them -- began arranging a suite of funds focused on supply-chain finance in 2017. The entities bought securitized loans packaged by Greensill, a firm created by Australian businessman Lex Greensill. Much of the debts were linked to Gupta’s businesses.WarningsOfficials at the commodity trade-finance unit were concerned when they found out about the funds’ links to Gupta and took their fears to Thomas Grotzer, general counsel for the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the trades at the asset-management unit.Grotzer was promoted last month to interim global head of compliance at Credit Suisse. He didn’t respond to requests for comment. Mathys, head of fixed-income at the asset-management division, and Haas, a portfolio manager, were put on temporary leave in March. Neither responded to requests for comment.The bank pushed ahead with the funds and marketed them to investors as being made up of short-term debt secured on invoices, assets considered so safe that Credit Suisse gave the largest vehicle its lowest rating for risk. Yet part of the loans were linked to mere possible future revenues.Other parts of the bank continued working with Gupta as well. Credit Suisse’s investment bankers were due to lead an initial public offering for Liberty’s U.S. steel arm, which was ultimately pulled, according to a statement from the company. Gupta also announced that the Swiss bank would finance his planned acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year.Credit Suisse has so far recouped about $5.9 billion of the $10 billion in these supply-chain funds, but it remains unclear how much will be returned ultimately to investors. Loans to Gupta’s businesses are among a batch of debts that are the “principal sources of valuation uncertainty,” the bank said earlier this month.Liberty Commodities’s external legal advisors investigated “alleged rumors concerning the paperwork” it used in 2019, according to Mitchell, the spokesman for GFG Alliance. They found no evidence to substantiate the rumors, nor was the company “ever subject to further complaints or proceedings,” he said.“LCL has ongoing banking relationships with separate financial institutions,” Mitchell said, referring to Liberty Commodities. “The trade-finance market has been hugely challenging for all but the very largest commodities traders in recent years. Nevertheless, no financial institution has been left out of pocket as a result of lending money to LCL. On the contrary, they have received substantial commercial returns.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>Amazon on Thursday reported a $2.5 billion second-quarter profit, which far exceeded Wall Street’s expectations. It also offered a better-than-expected forecast for its operating profit for the third quarter. Although its revenue fell shy of projections, investors still applauded the results, sending the stock up as much as 4% in after-hours trading. All parts of Amazon's posted strong gains, but its advertising business and its North American retail segment were standouts. Wall Street expected big things from Amazon in the second quarter. And the e-commerce giant delivered in a huge way — at least, on the bottom line. The Seattle company posted a $2.5 billion profit in the period. That wasn't just a quarterly record for Amazon, but it was nearly 13 times bigger than the profit the company recorded in the second quarter last year. On a per-share basis, Amazon's earned $5.07, which was more than twice what analysts had projected. The company's sales grew an impressive 39% to $52.9 billion, but they fell shy of Wall Street's expectations. "It was a strong quarter," Brian Olsavsky, Amazon's chief financial officer, said on a conference call with analysts. Olsavsky attributed the company's much better-than-expected bottom line to its ability to hold the line on operating costs and to a boost from its rapidly growing and highly profitable advertising business. "Advertising is starting to make an impact on our gross profit," he said. Amazon also offered a more optimistic outlook for its bottom line in the third quarter than analysts were forecasts. But the company's good news on its bottom-line was tempered by the fact that it missed Wall Street's revenue expectations in the second quarter and projected its sales will fall shy of their previous forecasts in the third quarter. Investors initially cheered the results, sending the company's stock up as much as 4% in after-hours trading. Following the call, the stock was trading up $65.83, or 3.6%, to $1,873.83. On the bottom line, Amazon bested Wall Street's forecasts Here's what the company reported and how it compared with what Wall Street was looking for: Revenue: $52.88 billion. Analysts were looking for $53.35 billion. In the year-ago period, Amazon recorded $37.96 billion in sales. $52.88 billion. Analysts were looking for $53.35 billion. In the year-ago period, Amazon recorded $37.96 billion in sales. Earnings per share: $5.07. Wall Street had projected $2.49 a share, but those numbers might not be comparable; Amazon posted a per-share profit of $0.40 in the second quarter last year. Here's what the company is forecasting for the third quarter and how that compares with analysts' previous projections: Revenue: $54 billion to $57.5 billion. Wall Street's prior forecast was $58.03 billion. In the third quarter last year, Amazon saw $43.74 billion in revenue. $54 billion to $57.5 billion. Wall Street's prior forecast was $58.03 billion. In the third quarter last year, Amazon saw $43.74 billion in revenue. Operating income: $1.4 billion to $2.4 billion. Wall Street had been expecting $1.28 billion. In the same period last year, the company posted an operating profit of $347 million, including results from Whole Foods. $1.4 billion to $2.4 billion. Wall Street had been expecting $1.28 billion. In the same period last year, the company posted an operating profit of $347 million, including results from Whole Foods. Earnings per share: Amazon didn't offer earnings guidance. Analysts were expecting per-share profits of $1.68 for the third quarter. In the same period last year, it earned $0.52 a share. The company benefitted from favorable exchange rates Amazon's second-quarter results did benefit from a kind of artificial tailwind — the dollar's appreciation against other currencies, which boosted the dollar value of its overseas sales. That factor added $760 million to its revenue and $466 million to its net income in the period, the company said. Without the foreign-exchange effect, Amazon's revenue miss would have been even more dramatic, as its sales growth for the period would have been 37% instead of 39%. Without that boost and a few other minor adjustments, Amazon would have posted $2.07 billion in income for the quarter, or $4.14 a share — which still far exceeded analysts' forecasts. But Amazon's results were more than just a product of a stronger dollar. The company saw strong growth — particularly on the bottom line — in all its business segments. Its North American retail business specifically fared well. In the period, that segment's sales rose 44%, to $32.17 billion, boosted in part by the addition of Whole Foods, which Amazon didn't own in the second quarter last year. More impressively, the North American retail businesses operating profit jumped to $1.84 billion from $436 million last year. But advertising gave it a boost — as did holding the line on costs Amazon's international retail business' revenue jumped 27% from the year-ago period, to $14.61 billion, and cut its operating loss to $494 million from $724 million a year earlier. Meanwhile, Amazon Web Services, the company's cloud-computing business, saw sales jump 49% from the second quarter last year, to $6.11 billion. It posted an operating profit of $1.64 billion, up from $916 million a year ago. And its advertising business continued to surge. Amazon's "other" revenue, which is largely comprised of ad sales, grew a whopping 132% in the quarter to $2.2 billion. That growth is starting to effect the growth rates and profitability of both Amazon's North American and international business segments, Olsavsky said. But the company also did well on the cost front. Its total operating expenses grew 33.7% from the second quarter last year, which is a significantly slower pace than the 39.3% rate at which its sales grew. While the company's fulfilment costs surged nearly 54% in the quarter, all of its other costs — fulfillment, marketing, technology, administrative — grew much slower than its sales. On the call, Olsavsky noted that Amazon slowed the pace of its hiring in the second quarter and markedly decreased its build-out of new fulfilment centers. It also focused on wringing out efficiencies in its data centers, he said. Amazon saw "better-than-expected efficiencies in its operations," he said.<doc-sep>
Though its revenue slightly missed, the e-commerce and cloud giant blew away earnings estimates with the help of strong margin growth and controlled spending. Amazon.com's (AMZN) - Get Report margins continues to surge, and -- for now -- its trademark heavy spending growth is being dialed back a bit. That's helping the e-commerce and cloud giant's shares make fresh highs following its Q2 report, even though the revenue numbers it shared fell a little short of expectations. After the bell on Thursday, Amazon reported Q2 revenue of $52.89 billion and GAAP EPS of $5.07. Revenue was officially up 39% and grew about 31% after backing out the impact of last August's Whole Foods acquisition, but was slightly below a $53.37 billion consensus. However, EPS, aided by the aforementioned margin and spending trends as well as minimal income tax expenses, blew out a $2.48 consensus. For Q3, Jeff Bezos's firm expects revenue of $54 billion to $57.5 billion, which is below a $58.1 billion consensus. However, operating income guidance of $1.4 billion to $2.4 billion is above a $1.73 billion consensus at the midpoint. Shares rose in after-hours trading on Thursday to a new all-time high, and opened Friday up 3.2% to $1,866.40. The stock is now up about 60% on the year. Here are some takeaways from Amazon's earnings report and call: 1. The Revenue Numbers Aren't as Bad as They Initially Look The dollar's strengthening over the past three months meant that Amazon's International segment revenue ($14.6 billion in Q2) got less of a boost from currency swings than it did in Q1. In Q1, International revenue grew 21% in constant currency (CC), but 34% in dollars. In Q2, CC growth was still 21%, but dollar-based growth fell to 27%. Moreover, Amazon forecasts that in Q3, forex will actually serve as a 0.3 percentage-point headwind to total revenue growth. The full impact of the dollar's rally likely wasn't baked into Q2 and Q3 consensus estimates. 2. Spending Growth Slowed Meaningfully Though Amazon is still investing aggressively in many fields, spending growth rates slowed relative to Q1, and that helped the company trounce EPS estimates. Fulfillment spend (up 66% in Q1) rose 54% annually to $5.16 billion. Marketing spend (up 41% in Q1) rose 30% to $2.23 billion. Tech/content spend (up 40% in Q1) rose 31% to $5.55 billion. And G&A spend (up 34% in Q1) rose 27% to $1.11 billion. And with the qualifier that it tends to fluctuate a lot from one quarter to the next, capital spending -- depreciation expenses for which are eventually recorded on the income statement -- cooled as well. Direct purchases of property and equipment (driven in large part by warehouse investments) rose 4% to $3.24 billion, after having grown 44% in Q1. Capex related to capital leases (driven by AWS) actually fell 14% to $2.34 billion. That last number makes for quite the contrast with Alphabet/Google (GOOGL) - Get Report and Facebook (FB) - Get Report , each of which have been seeing huge capex growth this year. On the call, CFO Brian Olsavsky noted improved operating efficiencies -- in data centers, warehouses and elsewhere -- are helping restrain spending. He also noted that Amazon's fulfillment capacity growth, which was above 30% in 2016 and 2017, is expected to be lower this year. 3. Amazon Web Services (AWS) Remains a Juggernaut AWS revenue rose 49% for the second quarter in a row and totaled $6.11 billion, topping a $5.98 billion consensus. In addition, the segment's operating income grew 79% to $1.64 billion. Enterprise adoption of public clouds looks like a runaway freight train right now, and -- though top rivals Microsoft (MSFT) - Get Report and Google are also seeing strong cloud growth -- AWS remains in a league of its own in terms of its scale, customers, feature set and ecosystem. Much as Microsoft signaled on its recent earnings call regarding adoption of its Azure cloud platform, Olsavsky indicated customer uptake for more advanced AWS services in fields such as machine learning, IoT and serverless computing, is growing strongly. Amazon.com, Alphabet, Facebook and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL or GOOGL? Learn more now. 4. Other Services Business Are Also Doing Well Third-party seller services revenue (it covers things like commissions and fulfillment services for Amazon marketplace sales) rose 39% to $9.7 billion.