​Amazon's sales surge as possible Trump backlash looms

The e-commerce giant posts another blowout quarter and renews its streaming deal with the NFL. Even so, it faces potential challenges from the White House. Plus: Annual US Prime fees were raised by 20 percent.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
3 min read
President Trump Hosts American Technology Council Roundtable

President Donald Trump meets with Apple CEO Tim Cook, Microsoft CEO Satya Nadella and Amazon CEO Jeff Bezos in Washington, DC, last June.

Chip Somodevilla/Getty Images

With six tweets three weeks ago, President Donald Trump threatened many of the massive gains Amazon has enjoyed throughout its 24-year history.

After repeatedly calling out Amazon's partnership with the US Postal Service -- claiming the e-commerce giant was underpaying for shipments and engaging in a "scam" -- he ordered a review of USPS finances and operations.

The fusillades against Jeff Bezos ' company, one of Trump's favorite targets, have since died down, but serious questions remain whether the federal government will take action against Amazon, cutting into its surging revenue.

Such concerns didn't have much impact on the company's first quarterly report of the year Thursday, with Amazon yet again posting strong numbers that included a second consecutive quarter of over $1 billion in earnings and sales rising 43 percent to $51 billion. Amazon's stock jumped 7 percent in after-hours trading.

Amazon on Thursday also announced a price hike for an annual US Prime membership, to $199 from $99. Additionally, the National Football League said Thursday it renewed its deal to bring Thursday Night Football to the Amazon Prime Video streaming service for the 2018 and 2019 seasons.

The rosy numbers come a week after Bezos took a victory lap during his annual shareholder letter, revealing for the first time that Amazon Prime has over 100 million members.

But the stakes from Trump's animosity for the e-commerce giant are huge, involving Amazon's future postal rates, its government cloud contracts and its push to build a second headquarters. The company is also busy trying to grow in a variety of businesses, including streaming TV, groceries and cloud computing . Being slowed in these efforts could weaken Amazon's stock, tamp down its growth and potentially help competitors outpace the company.

Trump's anger is widely seen as stemming from his personal feelings toward Amazon's CEO, who owns The Washington Post, often a tough critic of the president.

A potentially challenging year ahead

Amazon and Bezos still have to get through what may become one of their most challenging years yet, which is saying something for a company known for setting -- and often meeting -- lofty goals.

There are three main areas in Trump's sphere of influence to watch for that could impact Amazon's future. First is the USPS rates. With Amazon now posting regular profits, following years of losses and nearly break-even quarters, it's in a far stronger position to sustain a hike in postal rates, but that's likely something it would like to avoid. Shipping costs for the first quarter rose 38 percent from a year earlier to $6.1 billion.

Second, Amazon is among the bidders for a multibillion-dollar cloud-computing contract with the Pentagon. Getting the deal would help the company cement its top spot in US cloud services -- boosting its highly profitable cloud business -- and give it an advantage in future government cloud contracts. Trump has yet to tweet about the contract process, but his distaste for Amazon could impact the final outcome of the deal.

Last, Amazon is in the process of finding a new second headquarters, with the top contender often seen as the Washington, DC, metropolitan area, since three of the 20 finalist cities Amazon picked are in that region. Trump's recent threats may cause Amazon to look elsewhere.

During a call with reporters Thursday, Amazon's leadership decided to comment when asked about regulation in light of Trump's recent tweets.

For the quarter, sales hit $51 billion, up 43 percent, but excluding favorable changes in foreign exchange rates compared with last year, sales rose 39 percent. Analysts expected sales of $49.9 billion, according to Yahoo Finance.

Profit hit $1.6 billion, or $3.27 a share, more than double the $724 million, or $1.48 a share, from a year ago. Analysts were expecting $1.27 a share. That big gain stemmed from growth in the North America business and Amazon Web Services cloud segment, though the international business posted a wider loss.

For the second quarter, Amazon expects to keep up the strong growth, predicting $51 billion to $54 billion in sales with operating income between $1.1 billion and $1.9 billion.

Tech Enabled: CNET chronicles tech's role in providing new kinds of accessibility.

Blockchain Decoded:  CNET looks at the tech powering bitcoin -- and soon, too, a myriad of services that will change your life.