Amazon.com Inc plans to deliver packages to members of its loyalty club Prime in just one day, instead of two days, part of a spending ramp-up that might curb future profits after a blockbuster first quarter.

Shares rose as much as 2% in after-hours trade on Thursday on the faster shipping announcement for customers around the globe and as Amazon’s first-quarter profit trounced estimates thanks to soaring demand for its cloud and ad services. Amazon will spend $800 million in the second quarter on the goal.

 The announcement adds pressure to rivals Walmart Inc and others already racing to keep pace with the speed and benefits of Amazon’s Prime program.

Amazon’s first-quarter net income more than doubled to $3.6 billion, while analysts were only expecting $2.4 billion, according to IBES data from Refinitiv.

Second-quarter operating income will be as much as $3.6 billion, but analysts had been expecting $4.2 billion, according to FactSet.

 Chief Financial Officer Brian Olsavsky said Amazon was still reaping rewards from prior years of hiring and investments in warehouses and other infrastructure.

“We’re banking the efficiencies of prior investments, continued into Q1,” he said on a call with reporters. “There’ll be times when we have to invest ahead to build out warehouse capacity, but right now we are on a nice path where we are getting the most out of the capacity we have.”

Olsavsky also said earlier that the company would spend more later this year to roll out more benefits to international Prime members.

Investments mean lower profits

The news marks a familiar refrain for the world’s largest online retailer. For years, Amazon has made expensive bets on new technology and programs, like its $13.7 billion purchase of Whole Foods Market in 2017 to become a player in the U.S. grocery business.

 Amazon’s investments had long meant lower profit. However, its steady, often successful marches into new industries have been lucrative to shareholders, including its founder Jeff Bezos, who had become the richest man in the world.

 The luster of these bets still shined brightly on Thursday. The company’s loyal customer base has drawn merchants to sell and increasingly advertise through its site in exchange for fees, helping Amazon transform from a largely low-margin retail business to a more and more lucrative marketplace.

Revenue from seller services jumped 20% to $11.1 billion in the first quarter, while ad and other sales surged 34%  to $2.7 billion, the company said.

Meanwhile, Amazon’s cloud unit kept growing as more enterprises moved data and computing operations to the technology company’s servers. Sales for Amazon Web Services (AWS) rose 41% to $7.7 billion in the first quarter.

More hiring, spending to come

Some analysts noted that these growth figures, while impressive, were lower than what Amazon had posted in prior quarters.

“Amazon delivered slower growth in all key segments,“ (AWS, advertising and e-commerce) “but margins skyrocketed, seemingly driven by less aggressive investment,” said Atlantic Equities analyst James Cordwell.

Amazon suggested that spending indeed was on the way, and with that smaller growth in profit.

‘Lord of the Rings’ prequel

The company has been building warehouses around the world to ensure its edge in delivering goods to customers the fastest. It is spending more on video, from live sports to a planned prequel series to “The Lord of the Rings,” to draw more people to log on to its website, watch, and while they are there, buy socks. Hiring will pick up from the 12 percent increase Amazon posted in the past 12 months, Olsavsky said.

And the company is delving into even less familiar terrain.

It recently announced investments in self-driving and electric car companies, teasing how it thinks these high-tech, capital-intensive businesses could pay dividends potentially in the form of autonomous deliveries in the long run. Amazon has not described in detail its thinking behind the bets.

In China, where the company had long struggled to compete with Alibaba Group Holding Ltd, Amazon said this month it would close warehouses and its domestic marketplace in July. There were silver linings for investors, however.

Amazon’s Olsavsky said the company saw no material impact in India from actions the company took to comply with new regulations there affecting foreign investment in the e-commerce sector, something Amazon had voiced concern about in the past.

Prime signups on rise in India

Prime member signups in India, one of Amazon’s most important growth markets, continue to be rising the fastest in the company’s history.

Bezos, who many regard as a management guru, also settled his closely watched divorce such that he will retain full voting control of his family’s stock, sparing Amazon a boardroom battle. However, his fortune, which has been the largest of any married couple in the world, will be divided.

The company forecast net sales of between $59.5 billion and $63.5 billion for the second quarter, the midpoint of which was below analysts’ average estimate of $62.37 billion, according to IBES data from Refinitiv.
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Every month, when his respiratory medicine runs out, Dionysis Assimakopoulos heads to the most unlikely pharmacy in Athens.

Amid derelict stadiums dating from the 2004 Athens Olympic Games, the volunteer-staffed social pharmacy of Hellinikon has handed out free medicine to hundreds of poverty-stricken patients, keeping some of them out of death’s reach.

“My wife and I have been unemployed for over two years. We need about 150 euros for medicine every month,” says Assimakopoulos, a former baker.

Established at the height of the crisis in 2011, the pharmacy runs on donated medicine and disposables. Some 40,000 people have brought medicine, many from abroad, says on-duty pharmacist Dimitis Palakas.

Another patient waiting in line is Achilleas Papadopoulos, a retired tenor. His pension of 700 euros is not enough to cover the antibiotics he has come for.

During nearly a decade of cuts imposed as Greece struggled to avert national bankruptcy, public education and health were among the sectors hit the hardest as the country lost a quarter of its national output.

Amid sweeping layoffs, wage cuts and tax hikes, many could not maintain their social insurance contributions and were pushed out of state-provided health support.

“Only 11 percent of Greeks can currently afford private insurance giving full health coverage,” says Grigoris Sarafianos, head of the association of private Greek health clinics.

According to the national statistics service, Greeks paid 34.3 percent of their medical expenses out of their own pocket in 2016.

The crisis exposed “huge state shortages,” says Petros Boteas, a member of the Hellinikon health team, which serves over 500 patients every month.

“There are fewer doctors and hospital staff. Money for medicine has been cut. There is a long waiting list for doctor’s appointments…we had a cancer patient given an appointment in three months,” he told AFP.

To avoid a long wait — especially in an emergency — many are forced to seek private healthcare, regardless of the cost. There are currently over 120 private clinics in the country.

‘Go to a better school’

A similar scenario casts its shadow over education.

When Aspasia Apostolou’s son was 11 years old and finishing Greek public primary school, his class teacher did something unexpected.

“He told us our son is bright and that he should be in a better school,” reminisces Apostolou, a 44-year-old lawyer.

According to the government, public funding for education fell by about 36 percent during the crisis.

Thousands of trained staff including teachers and doctors emigrated — part of an exodus of some 350,000 people — or opted to retire.

A recent study by the London School of Economics found 75 percent of Greek crisis emigrants hold university degrees.

The OECD in a 2017 study — prepared at Greece’s request — said austerity cuts had “a major impact on the demands on the Greek education system, and on those working within it.”

It said that in 2015, there were approximately 25,000 posts vacant for teachers in primary and secondary education schools.

Apostolou now pays 5,800 euros ($6,500) a year in tuition fees at a private school where her son can be assured of a well-structured curriculum.

“At our old school, the children usually come home early. So many school hours are lost because of teacher shortages during the year,” she says.

“There is no evaluation, no reward for effort in a public school. You wallow in mediocrity.”

Between 2011 and 2014, the state cut education wages and expenses by 24 percent, the OECD study said.

While school books are provided by the state free of charge, the cuts continue to impact other essential resources including computers and petrol for heating.

It’s not uncommon for schools to be shut down for lack of heating. The last instance was in February at the Athens school complex where Prime Minister Alexis Tsipras himself was a pupil.

In public schools, much now relies on private initiative and personal goodwill, what Greeks call ‘filotimo’, says Athanassia, a veteran public school teacher.

“I’ve worked in schools where the principal or teachers or parents paid out of their own pocket for essentials…or discreetly brought food to needy families,” says Athanassia, who has worked in 20 public schools as teachers are shared out to plug staffing gaps.

“Whatever works is based on filotimo,” she adds. “If funding were better, it would be totally different.”

According to the Greek statistics agency, around 12 percent of the country is near the poverty level.

In response, Tsipras’ government in 2016 began a program giving out free school meals at hundreds of schools in poorer regions.

Similarly, the government allowed access to public hospitals to long-term jobless with Greeks without health insurance.

“It’s a step forward, but inequalities persist,” says Petros at the Elliniko clinic.

“Without health insurance, securing a public hospital appointment might take six months, even for critical examinations,” he adds.
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Samsung said Monday it was delaying the launch of its folding smartphone after trouble with handsets sent to reviewers.

Some reviewers who got their hands on the Galaxy Fold early reported problems with screens breaking.

Samsung said it decided to put off this week’s planned release of the Fold after some reviews “showed us how the device needs further improvements.”

The South Korean consumer electronics giant planned to announce a new release date for the Galaxy Fold in the coming weeks.

Initial analysis of reported problems with Galaxy Fold screens showed they could be “associated with impact on the top and bottom exposed areas of the hinge,” Samsung said.

There was also an instance where unspecified “substances” were found inside a Galaxy Fold smartphone with a troubled display, according to the company.

“We will take measures to strengthen the display protection,” Samsung said.

“We will also enhance the guidance on care and use of the display including the protective layer.”

A handful of U.S.-based reporters were given the flagship Galaxy Fold phones, priced at $1,980, ahead of the model’s official release, and they reported screen issues within days of using the devices.

Samsung spent nearly eight years developing the Galaxy Fold, which is part of the leading smartphone maker’s strategy to propel growth with groundbreaking gadgets.

The company essentially gave reviewers a “beta product” without enough information, such as not to peel off a protective coating meant to be permanent, according to independent technology analyst Rob Enderle.

“It was all avoidable for a company the size of Samsung,” Enderle said.

The failure of a “halo product” meant to showcase innovation and quality could tarnish the brand and send buyers to rivals.

“If a halo product fails, people don’t trust that you build quality stuff,” Enderle said.

“It can do incredible damage. And Huawei is moving up like a rocket, so this could be good for Huawei.”

Surviving life

Creative Strategies analyst Carolina Milanesi told AFP that a Galaxy Fold she reviewed worked fine, performing even in sometimes messy situations that arise in everyday life.

She wondered if some problems with smartphones reviewed were due to dust, moisture or other material getting into handsets through small openings at the tops and bottoms of hinges.

“If stuff gets in there, it can make its way under the screen,” Milanesi said.

“There seems to be a kind of real-life test that maybe didn’t occur.”

Testing folding phones in a lab is a much different scenario than challenging them “in the wild” where they need to endure pockets, handbags, greasy food, spilled coffee and more, the analyst noted.

Samsung may also need to do more to convey how folding screens warrant more careful handling than stiff displays that have been improved over generations of smartphones.

Milanesi did not expect a slight delay in the launch of the Galaxy Fold to be a major setback for Samsung, saying that the model was unlikely to be a big driver of sales given its price and that services or apps are still being adapted to the new type of smartphone.

Samsung smartphones tuned to work with super-speedy fifth-generation telecommunications networks are more important to the company’s bottom line on the near horizon, according to the analyst.

“It is still early days for 5G, but that is the product that is going to make a difference for Samsung this year,” Milanesi said.

Samsung is the world’s biggest smartphone maker, and earlier this month launched the 5G version of its top-end Galaxy S10 device.

Adding to Samsung woes

Despite the recent announcements about its new high-end devices, Samsung has warned of a more than 60 percent plunge in first-quarter operating profit in the face of weakening markets.

The firm is also no stranger to device issues.

Its reputation suffered a major blow after a damaging worldwide recall of its Galaxy Note 7 devices over exploding batteries in 2016, which cost the firm billions of dollars and shattered its global brand image.

Samsung originally planned to release the Galaxy Fold as scheduled on April 26.

While Samsung’s device was not the first folding handset, the smartphone giant was expected to help spark demand and potentially revive a sector that has been struggling for new innovations.

Other folding devices have been introduced by startup Royole and by Chinese-based Huawei.

Samsung Electronics is the flagship subsidiary of Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th-largest economy, and it is crucial to South Korea’s economic health.

The company has enjoyed record profits in recent years despite a series of setbacks, including the jailing of its de facto chief.
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Argentine President Mauricio Macri rode to power in 2015 promising to bolster the farming sector and cut back taxes that had stymied exports. The country’s backbone industry welcomed him with open arms after years of export controls aimed at keeping domestic prices low.

The powerful sector is now cooling on the center-right president, frustrated by revived export tariffs and sky-high borrowing rates that have bruised smaller farmers, a concern for Macri ahead of national elections later in the year.

Argentina’s farming sector, which brings in more than half of the export dollars in South America’s second-biggest economy, is a key barometer for Macri, who has sold himself as a champion of business and industry, none more so than the country’s huge soy, wheat and corn farms.

“We publicly supported the administration in the last elections [mid-terms in 2017] as we believed they were managing the policies farmers needed,” said Carlos Iannizzotto, president of the Confederación Intercooperativa Agropecuaria, one of the country’s four major farming bodies. “Today we cannot do the same.”

Reuters spoke to the leaders at all four associations, who collectively make up the influential “Mesa de Enlace” or liaison committee. They cited Macri’s backtracking on cutting taxes on exports and the high cost of credit with interest rates above 60 percent.

The farm lobbies do not directly sway the votes of a huge proportion of voters, analysts and pollsters cautioned, but said that their weakening support was a sharp warning sign for Macri ahead of the October election, which is expected to be closely fought.

Dardo Chiesa, president of a second lobby, the Confederaciones Rurales Argentinas, said farmers had become “disappointed” with Macri’s performance on the economy, with a tumbling peso and inflation running at over 50 percent.

“The first issue in terms of voting this year is the economy, and the reality is that the government’s economic management has not satisfied the sector,” he told Reuters.

‘I wanted change’

Everything had started so well. 

After Macri’s election in 2015 he eliminated export taxes on corn and wheat and lowered those for soy; he also got rid of limits on corn and wheat exports — gaining cheers from farmers.

However, an acute financial crisis last year forced Macri to take a $56.3 billion lifeline from the International Monetary Fund (IMF), in return pledging to balance the country’s deficit — including restarting taxes on exports.

In addition, to deal with inflation and protect the peso currency, the government has hiked interest rates to almost 70 percent, choking off the ability of farmers and other small businesses to obtain funds to expand and buy equipment.

Sales of combine harvesters, tractors and seeding machines plummeted last year, government data showed.

“I voted for Macri because I wanted a change, but Macri has really let us down,” Carlos Boffini, who runs a 400-hectare farm in Colón, in the province of Buenos Aires, told Reuters.

“[Macri] spoke about how the export taxes were unfair. Yet here they are again. He was going to get rid of a lot of things and he did not get rid of anything.”

To be sure, not all farmers are turning away from Macri, who is still viewed by many as the most business-friendly candidate.

Daniel Pelegrina, head of Sociedad Rural Argentina, which generally represents larger farming groups, stopped short of giving his direct support for the president but said the government’s policies were roughly in the right direction.

“Argentina needs to be reintegrated and active globally, it needs to have an export-oriented economy,” he said, adding that there is, however, a need to review the high taxes.

If not Macri, then who?

Macri is facing a split field in the elections that start in October before a potential run-off if there is no clear winner.

Likely rivals include ex-President Cristina Fernandez de Kirchner, whose populist and interventionist policies made her deeply unpopular with farmers. More moderate members of the Peronist opposition include former economy minister Roberto Lavagna and former congressman Sergio Massa.

Carlos Achetone, president of the Federación Agraria Argentina (FAA), the last of the four main agricultural bodies, said many farmers were looking beyond Macri if there was a “third alternative with substance.”

Analysts and farmers, however, said if the election ended up being between Macri and Fernandez — as many polls expect if she runs — then farmers would have little choice about how to vote.

“There is a consensus of not returning to populism. Argentina cannot return to populism,” said Chiesa, referring to Fernandez’s administration which had introduced export quotas on grains and meat to keep domestic prices low for consumers.

Farmer Boffini agreed, adding the sector’s general dislike of the former leader could well be Macri’s saving grace.

“Do you know what Macri’s advantage is? It’s that we don’t like Cristina and so if Cristina shows up and there are no other options, we will simply vote for Macri so that Cristina does not get in,” he said.
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