Daily Tech Snippet: Monday, August 1st

• A quiet news weekend, but lots of big news from Friday, which I've recapped below.

• Amazon’s Profits Grow More Than 800 Percent, Lifted by Cloud Services: For the second quarter, which ended June 30, Amazon reported net income of $857 million, or $1.78 a share, up from $92 million, or 19 cents a share, a year ago. Revenue jumped 31 percent to $30.4 billion from $23.19 billion a year ago. Amazon’s shares rose more than 2 percent in after-hours trading after the release of its results. For most of its life, Amazon sacrificed profits if it could build another few warehouses to ship orders to customers more quickly or find some other investment to fuel its growth. Now, it cannot avoid showing big profits thanks to the lucrative cloud computing business in which it has improbably become a leader. On Thursday, Amazon reported net income of $857 million in its most recent quarter, the third quarter in a row in which it has shown a record profit. Its net income for those three months was also more than nine times the amount for the same period last year. A big part of what has made Amazon’s story as a company so captivating to investors is the single-minded focus of Jeffrey P. Bezos, the company’s founder and chief executive, on making big long-term investments. Unlike Google and Facebook, which have highly profitable advertising businesses, Amazon’s retail business has operated on thin profit margins that quickly vanish when the company begins spending heavily, pushing it into the red. What is most striking about its recent habit of showing profits is that Amazon has not suddenly become stingy about making investments. In a conference call, Amazon’s chief financial officer, Brian Olsavsky, said that the company would open 18 new fulfillment centers — the warehouses from which it processes customer orders — in the third quarter of this year, three times the number it opened in the same period last year. The retail business that Amazon is best known for is growing at a torrid pace even though it is now more than two decades old. The company’s North American retail revenue jumped 28 percent as it continued to benefit from a shift in consumer spending to online from offline stores. The company’s spending on new warehouses and delivery services has played an important role in helping it gobble up a bigger portion of the money people spend on consumer goods. “They are defying the laws of gravity,” said Gene Munster, an analyst at Piper Jaffray. “It shows their level of market share gains is increasing.”

• Google Silences Doubters With Blockbuster Quarter: It’s good to be Google. Sometimes it’s just plain great. Revenue regularly increases at a clip rarely achieved by firms of its size. The same goes for profits. Seven of its products have over a billion users, a scale unimaginable in the predigital era. A reorganization last year into a holding company called Alphabet, accompanied by some related high-level personnel moves, was unexpected but generally applauded. Investors and analysts see little in the short term to disrupt this happy state of affairs, which has pushed Alphabet’s value to more than $500 billion. Those sentiments were confirmed in its second-quarter earnings report, released Thursday after the market closed. It was even better than the rosy forecasts. Revenue rose to $21.5 billion, about $750 million more than analysts were predicting and a 21 percent jump from a year earlier.Celebration ensued. Alphabet’s shares, which drifted sideways during regular trading, immediately rose 4 percent after hours.

• Oracle’s $9.3 Billion Deal for NetSuite Will Bolster Its Cloud Offerings: When Evan M. Goldberg founded NetSuite in 1998, he did so with backing from his former boss, Lawrence J. Ellison, who started the software giant Oracle. On Thursday, their relationship came full circle as Oracle agreed to acquire NetSuite for $9.3 billion to beef up its cloud offerings.The NetSuite deal is Oracle’s largest acquisition since it bought PeopleSoft for $10.3 billion in 2004, according to data from Standard & Poor’s Global Market Intelligence. That deal, a hostile takeover fought out over 18 months, extended Oracle’s customer base and product offerings. It made Oracle bigger, but it did not change its business model. About 5,000 PeopleSoft employees, close to half the company, were laid off in the following months. The NetSuite purchase, on the other hand, is at the heart of Oracle’s fight to remake itself for the modern world of cloud computing, or providing accessing to vast computational resources over the internet. This transition has shaken up the software business for the last several years. Companies like Google, Microsoft and Amazon have created markets worth billions, and older companies like IBM, Hewlett-Packard and Oracle have struggled to change the way they make and sell their products.The deal also illustrates that, for all the reach and novelty of tech, Silicon Valley remains a very small place with long personal histories. Mr. Goldberg got the idea for NetSuite after conversations with Mr. Ellison about where else the internet might go. Down the hall was another rising star at Oracle, named Marc Benioff. Mr. Benioff started a company called Salesforce.com within weeks of NetSuite’s start, also with backing from Mr. Ellison. Today, Salesforce is regarded as the leading company selling only cloud software, with a market capitalization of $55.7 billion. The relationship between Oracle and Salesforce is testy, however. In 2011, Mr. Benioff was kicked out of a big Oracle conference after he lampooned Oracle’s cloud efforts. And now the NetSuite technology will help Oracle compete more directly with Salesforce for customers.

• Flipkart valuation shrinks again; firm reveals job cuts: Global asset manager T. Rowe Price Group Inc. has reduced the value of its stake in Flipkart Ltd by a fifth, its second cut in four months, reflecting continued investor concerns over the valuations of technology start-ups. The move came ahead of a statement by Flipkart on Friday that it was cutting 300 to 600 additional jobs, after already shrinking its workforce to 30,000 from 33,000 at the start of the year to reduce costs. US-based T. Rowe Price lowered the value of its holding in Flipkart to $96.29 per share, a 20% erosion, according to a filing the investment manager made to the US Securities and Exchange Commission (SEC) for the quarter ended June. That values Flipkart at $10.3 billion, according to T. Rowe Price. The firm had earlier cut the value of its stake in Flipkart by 15% in April.On Friday, a Flipkart spokeswoman said the company had cut 300 to 600 jobs.The Economic Times reported on Friday that Flipkart was offering employees who had failed to meet expectations the choice to either resign or be sent off with severance pay, adding that the move was expected to impact 700-1,000 staff.