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Amazon Surprising 2Q Earnings

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Amazon

“A very good cost quarter,” is the way Amazon.com Inc CFO Brian Olsavsky conservatively described Amazon’s Q2 2015 results. Operating cash flow increased 69% to $8.98 billion for the preceding twelve months, compared with $5.33 billion for the same period last year.

Investors reacted less conservatively with shares surging more than 17% to $566 within hours of the announced result. In the past Amazon’s been known for sacrificing short-term profit, preferring to spend its money on long-term investment. Wall Street was bracing for a loss of 14 cents per share with only $22.39 billion in revenue — so results that put the company narrowly in the black understandably surprised the market.

Net sales also increased 20% to $23.18 billion in the second quarter, compared with $19.34 billion in Q2 2014. Net sales increased 27% compared to Q2 2014.

Some factors which impacted the results were Amazon’s increased deployment of automation in its warehouses to reduce costs, the Prime Day online sale (where customers purchased 34.4 million items reportedly at a rate of 398 products per second), and a sales increase of 81% to 1.82 billion of Amazon Web Services (AWS) which supplies cloud computing.

Contrast this to other companies’ recent Q2 reports and the results are even more staggering. Apple posted Q2 revenue of $58 billion and quarterly net profit of $13.6 billion reflecting 27% revenue growth. Microsoft’s Q2 revenue was $26.5 billion and shares dropped 4% mostly due to Windows OEM revenue — the amount of income Microsoft gets from selling software on new retail PCs — being down 13% from last year.

Amazon CEO Jeff Bezos has now taken Amazon to a company that’s bigger (by capitalization) than Walmart. Impressive for a business that only a year ago reported a loss of $126 million and ever-shrinking margins. Bezos is well known for taking a long-term view of the market and his attention to business detail, and Amazon has certainly been working on those details. Olsavsky commented that there is “certainly” a connection between Amazon’s past investment, faster delivery times, same-day delivery services (Prime Now), and revenue today.

The impact of growth in AWS cannot be overlooked. Bezos has referred to AWS as a “$5 billion business.” The 2015 Q2 results put AWS with a run rate greater than $7 billion — well ahead of its target. In comparison, Microsoft’s run rate for their longer-established cloud business reported was $8 billion for the same period.

A good result for Amazon also means a good year for Bezo personally with his net worth increasing by $8 billion as the 2Q result came out. By way of contrast, Google owner Sergy Brin and Larry Page’s net worth surged by $4 billion each last week when their 2Q result came out and market capital increased by $60 billion.

Amazon’s now seen as a growth company. Even the workforce is predicted to increase (Amazon has over 4,600 open positions just in its Seattle headquarters). There are new services on the horizon such as the production of the original film, video content for its subscription streaming service Prime. Investors will be eagerly awaiting Q3 results to see if the growth in revenue continues.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Fintech

From Trading to Credit: Robinhood Launches No-Fee Credit Card with Gold Membership Perks

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Robinhood

Robinhood Markets Inc. has announced the launch of its highly anticipated no-fee credit card and it was accompanied by exclusive perks for Gold membership subscribers.

This bold move is a step in the company’s mission to evolve into a comprehensive financial services provider.

The Robinhood Gold Card boasts an array of enticing features. Chief among them is the absence of annual costs or foreign transaction fees, positioning it as an attractive option for consumers seeking financial flexibility.

Moreover, cardholders stand to benefit from a generous 3% cash back on all categories of purchases, a competitive offer in comparison to industry rivals.

Vlad Tenev, CEO of Robinhood, emphasized the company’s commitment to innovation and industry leadership in an interview.

He expressed the intention to not merely introduce a credit card, but to revolutionize the market with a product that sets new standards for customer satisfaction and financial empowerment.

The announcement has sparked enthusiasm among investors, with Robinhood’s shares witnessing a 6.9% surge in early market trading following the news.

This surge further underscores the market’s confidence in the company’s strategic direction and its potential to disrupt traditional financial services.

Beyond the credit card venture, Robinhood has been steadily diversifying its offerings. With the introduction of retirement products and the expansion of commission-free trading services internationally, the company is positioning itself as a formidable player in the global finance landscape.

As Robinhood continues to innovate and expand its suite of services, its trajectory suggests a promising future as a leading force in democratizing access to financial tools and services.

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Telecommunications

NCC Files Copyright Infringement Charges Against MTN Nigeria and Others

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Karl O Toriola - Investorsking.com

The Nigerian Copyright Commission (NCC) has taken legal action against MTN Nigeria Communications Ltd. and four individuals, including its Chief Executive Officer, Karl Toriola, over alleged copyright infringement.

The charges, filed in the Federal High Court, Abuja Division, revolve around the unauthorized use of musical works belonging to artist Maleke Idowu Moye.

According to the NCC, the defendants are accused of offering for sale, selling, and trading musical works of Maleke without his consent between 2010 and 2017. These works were allegedly used as Caller Ring Back Tunes without proper authorization.

The musical pieces in question include popular tracks such as “911,” “Minimini-wanawana,” and “Stop racism,” among others.

The commission further alleges that the defendants distributed these musical works to subscribers without authorization, infringing upon the rights of the artist.

The charges are based on provisions of the Copyright Act, Cap. C28, Laws of the Federation of Nigeria, 2004.

As the case awaits assignment to a judge and a fixed date for mention, it marks a significant development in the ongoing efforts to uphold copyright protection in Nigeria’s telecommunications sector.

This legal action underscores the NCC’s commitment to safeguarding the intellectual property rights of artists and creators within the country.

MTN Nigeria, a major player in the telecommunications industry, now faces a legal battle that could have broader implications for how intellectual property rights are respected and enforced within Nigeria’s digital landscape.

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Telecommunications

MTN’s MoMo Sees 32.2% Surge in Transaction Volumes

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MTN Nigeria - Investors King

MTN Group’s mobile money platform, MoMo, has experienced a 32.2% surge in transaction volumes.

With 72.5 million active users, MoMo continues to solidify its position as a leading fintech service provider in Africa, tapping into the continent’s burgeoning mobile banking sector.

The company’s success underscores the growing trend of Africa’s young and tech-savvy population embracing mobile technology to address financial needs.

Mobile phones are increasingly becoming a tool for bridging gaps in services, particularly in banking, presenting a lucrative opportunity for wireless carriers like MTN to capitalize on the burgeoning fintech market.

MTN’s achievement comes as it finalizes a deal with Mastercard Inc., valuing its fintech business at an impressive $5.2 billion.

This strategic partnership further enhances MTN’s position in the digital finance space, positioning it for continued growth and innovation.

However, MTN is not alone in its fintech endeavors. Rivals such as Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd. are also making strides in digital transformation, with plans to separate and monetize their fintech businesses in the long term.

Airtel Africa, for instance, is reportedly considering an IPO for its mobile money unit, indicating the high stakes and intense competition within the sector.

Despite the remarkable success in its fintech ventures, MTN faced challenges in its core telecommunications business, with service revenue growth slowing to 6.8%.

Inflation and currency devaluation in key markets, particularly Nigeria, impacted profitability, highlighting the complexities of operating in diverse African markets.

As MTN continues to expand its fintech footprint and invest in infrastructure to enhance connectivity across the continent, it remains poised to capitalize on the immense potential of Africa’s digital economy.

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