Amazon Shares Surge After Wide 3Q Beat

Amazon.com Inc. reported a rare profit for its third quarter, thanks in part to its fast-growing cloud-computing division, while sales surged more than expected.

Shares climbed 8% after hours.

The Seattle online retailer posted a profit of $79 million, or 17 cents a share, compared with analysts' estimates of a 13-cent loss. A year earlier, Amazon posted its biggest loss in 14 years as it spent heavily to build out its warehouse network and license music and video content and other projects.

It also marks a year since Amazon disclosed its Fire smartphone was a flop, prompting a $170 million write-down as inventory of the unpopular handset mounted. Amazon has since signaled it is putting on hold smartphone development and has dismissed engineers who worked on the device.

But it hasn't scaled back its hardware ambitions entirely. In September, Amazon released a new slate of tablets computers, including a $50 version, and an upgraded Fire TV set-top box. It is developing a high-end computer for the kitchen known internally as Kabinet, people familiar with the matter have told The Wall Street Journal.

For the September quarter, Amazon said sales rose 23% to $25.4 billion, up from $20.6 billion last year. Analysts were expecting $24.9 billion.

Data curated by FindTheCompany.com

Its Amazon Web Services cloud computing unit, which rents out computing power to other companies, reported sales of $2.09 billion, up from $1.17 billion, and an operating profit of $521 million. Amazon has said AWS, as it is known, could one day surpass the core retail business in size.

The quarter included the one-day Prime Day sale Amazon touted as having more discounts than Black Friday. But it was ultimately a promotion to tempt holdouts to join Amazon's popular $99-per-year Prime unlimited shipping program. The company covets Prime members because they reportedly spend at least twice as much on the site as non-Prime members.

In addition to Prime Day, Amazon has been larding up the Prime program by adding new cities with free same-day shipping, as well as others where they can receive goods within an hour or two. On Thursday, Amazon announced San Francisco and San Antonio Prime customers would be eligible for the speedier delivery program.

For the current quarter, the company guided for sales of $33.5 billion to $36.75 billion, in line with the $35.16 billion expected by analysts.

Amazon shares have been on a tear this year, rising more than 80%. By market capitalization, Amazon exceeded rival Wal-Mart Stores Inc. during the quarter, even though it has less than a quarter of the revenue.

By Greg Bensinger