Amazon profits dented by cloud

Retailer's profits expected to be damaged by increased cloud investment

Online retailer Amazon has announced that profits are down on last year as a result of heavy investment in its cloud offering. The announcement came as the company released its first-quarter results.

Analysts predict earnings of 61 cents (37p) per share, down on 66 cents (40p) per share for the same period last year.

However, revenue is expected to be $9.52bn (£5.78bn), up from $7.13bn (£4.33bn) last year. This growth is due in part to strong sales of its Kindle e-reader device.

The expected fall in profits has been put down to heavy investment in its cloud offering, a move which some analysts say is justified.

"We expect Amazon to continue to take a share in this accelerating growth environment [the cloud] and, despite a profit reduction as a result of near-term investment to meet accelerating growth demands, the company will ultimately benefit," said Evercore Partners analyst Ken Sena, as reported by Reuters.

Meanwhile, Amazon EC2, the cloud services arm of the retailer, experienced a blip before Easter that caused disruption to many high-profile customers.

Foursquare, Reddit and Quora were among those affected.

The problem, which stemmed from issues at the firm's North Virginia-based datacentre, was resolved within hours.