Amazon Sales Soar, But Profits Don’t

Jan 31, 2014 9:24am

Morning Money Memo…

GTY amazon kab 140131 16x9 608 Amazon Sales Soar, But Profits Dont

In this file photo, a general view of Amazon's fulfillment center is pictured in Peterborough, England on Nov. 28, 2013. Andrew Yates/AFP/Getty Images

Yes, it sells us almost everything. But why doesn’t Amazon make more money as the world’s biggest online retailer? Despite massive sales and revenue growth of 20 percent during the fourth quarter, Amazon earned only $239 million. Its operating margin was just 2 percent during the fourth quarter. Analysts were expecting more. The company’s shares fell 4 percent in after-market trading.

Amazon’s Chief Financial Officer says the firm may raise prices on its Amazon Prime two-day free shipping service because of rising fuel costs. Amazon has charged $79 a year for Prime memberships since launching the service in 2005. Prime customers also get access to Amazon’s video streaming service.

America has a retirement crisis. Tens of millions of people have no savings. Those who do had an average of just over $84,000 in their 401k funds last year, according to Fidelity Investments. Just over half of U.S. employers offer workers defined-contribution plans, but soon there may be help. The Treasury Department is planning to roll-out the first MyRA savings plans later this year. They were first announced this week by President Obama in the State of the Union Address.

“It’s a big deal for people who have no other way to save for retirement or save at all,” says Richard Rubin, who covers tax policy at Bloomberg News. “This is an opportunity for them to start a savings account with a little bit of a tax break and a guaranteed return.”

MyRA plans will be offered to employers, and the aim is help them sign up workers to save for retirement with small deductions from weekly paychecks. “There are all sorts of low and middle income workers across America who may be able to take advantage of this,” says Rubin.

Security experts say the theft of usernames and passwords from Yahoo could indicate hackers want to use them to achieve larger goals, like the ability to send more realistic spam messages. The bigger danger is access to email accounts could lead to more serious breaches involving banking and shopping sites. That’s because many people reuse passwords across many sites, and also because many sites use email to reset passwords. Yahoo didn’t say how many accounts have been affected.

“Monitoring, damage control: this is our future,” says Adam Levin of the firm Identity Theft 911. “Monitoring can be as simple as looking at your bank accounts and credit card accounts on a daily basis. Being notified anytime there are transactions in your bank account or your credit card accounts. That’s free. You can sign up with financial institutions.”

Stronger corporate earnings helped lift the stock market after a slow start to the year. The S&P 500 rose more than 1 percent Thursday after falling about the same amount in the previous trading day. Investors welcomed news that the U.S. economy grew at a 3.2 percent annual rate in the final three months of 2013, a positive sign for the economy this year. “It was a good, balanced GDP report,” said Sean Lynch, global investment strategist with Wells Fargo Private Bank, which manages $170 billion in assets.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesnow

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