The S&P 500 (SNPINDEX:^GSPC) closed at a record high Friday and the Dow Jones Industrial Average (DJINDICES:^DJI) also rose after the Commerce Department reported that U.S. gross domestic product grew a better-than-expected 3.2% in the first quarter.
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Strong results and one-day shipping boost Amazon
Amazon beat expectations for first-quarter earnings and raised the bar for other retailers by announcing it's evolving Prime two-day shipping into one-day shipping, and shares rose 2.5%. Net sales increased 17% to $59.7 billion, at the top end of the company's guidance but about what analysts were expecting. Earnings per share jumped 117% to $7.09, well above the $4.72 analyst consensus.
Operating income soared 129% to $4.4 billion in Amazon's most profitable quarter ever, propelled by sales growth in the company's highest-margin businesses: 41% in Amazon Web Services and 40% in subscription services. Net sales grew 17% in North America and 16% in the international segment (excluding currency effects).
On the conference call, an analyst asked why Amazon's guidance for Q2 operating income growth was just 3%, and CFO Brian Olsavsky took the opportunity to announce that one-day shipping will eventually be part of the core offering of Prime and will require $800 million of incremental spending next quarter. Shares of retailers Walmart and Target fell on the news, but those of Amazon partner Kohl's rose.
Data center weakness hits Intel
Intel's first-quarter results beat expectations, but a decline in its data center business and a lowering of its outlook for the year hammered the stock, which fell 9%. Revenue was flat year over year at $16.06 billion and non-GAAP earnings per share rose 2.2% to $0.89. Analysts were expecting Intel to earn $0.87 per share on revenue of $16.02 billion.
The "PC-centric" segment grew 4% thanks to strong sales of high-performance chips for gaming and large commercial applications. "Data-centric" businesses declined 5%, however, due largely to falling prices for nonvolatile NAND memory and what the company said was a data center inventory correction and weakness in China.
Intel lowered its full-year guidance from $71.5 billion in revenue three months ago to $69 billion and EPS from $4.60 to $4.35, well below the $4.58 it earned in 2018.
The chipmaker announced earlier this month that it is abandoning the 5G smartphone modem business and management said in the conference call it hadn't yet decided what to do with its assets in that area. The Wall Street Journal (subscription required) reported today that Intel had been talking with Apple about a sale of that business.