Amazon first-quarter profits up 18%

Amazon’s first-quarter profit has risen 18% as shoppers continue to flock to the online mega retailer to buy goods.

Nevertheless, the company forecasts an operating loss for the second quarter as it continues to invest heavily both internationally and at home.

Amazon has long focused on spending the money it makes to grow its business and expand into new areas, from movie streaming to e-readers and even grocery delivery.

On Wednesday, it launched Prime Pantry, a grocery delivery service for Prime members. And earlier this month, it introduced its first set-top video streaming box called Amazon Fire that sells for $99. Rumours of an Amazon phone have been swirling as well, but nothing has materialised.

“We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start,” said chief executive Jeff Bezos.

While investors have largely given Amazon a pass for focusing on growth and investing rather than turning a strong profit, it has been making some moves lately to strengthen its bottom line. It boosted its Prime two-day shipping membership programme annual fee from $79 to $99 in March to offset higher shipping costs.

Shipping costs rose 31% to $1.83bn during the quarter.

And to entice more people to sign up for the service at the 99-dollar price, which includes its streaming video service, the retailer said it inked a deal with HBO to stream some of its older shows online beginning on May 21.

The news was a coup for Amazon. HBO has steadfastly refused to license any of its programming to other streaming services such as Netflix or Hulu. Executives did not give specifics, but said renewals were exceeding expectations.

Net income for the quarter rose to $108m, or 23 cents per share. That compares with net income of $82m, or 18 cents per share last year. Analysts expected 21 cents per share, according to FactSet.

Revenue rose 23% to $19.74bn from $16.07bn. Analysts expected $19.42bn.

In fiscal 2014, the company expects revenue of $18.1bn to $19.8bn. Analysts expect $19.01bn. It expects an operating loss between $455m and $55m in the second quarter compared with operating income of $79m last year.

In a call with investors, Tom Szkutak, Amazon’s chief financial officer, said the predicted loss was due to investing “heavily” in its international operations as well as other areas of its business, including the content it provides.

In aftermarket trading, Amazon shares rose 35 cents to $337.50, after closing the day up nearly 4% at 337.15. The stock reached an all-time high of 408.06 on January 22. Since then, it has dropped 17%.