Amazon.com Inc on Thursday posted its most profitable quarter ever, but the world’s No. 1 online retailer still managed to disappoint Wall Street by badly missing estimates, sending its shares down more than 13 percent in after-hours trading.
The results, as well as the firm’s determination to invest more in new areas and its extremely low profit margins, brought back perennial questions for investors about the company’s ability to consistently earn money.
Net profit for the fourth quarter, which includes the holiday shopping season, rose to US$482 million, or US$1 per share, up from US$214 million, or US$0.45 per share, a year earlier.
That figure was held back by rising operating costs. It was well below analysts’ average forecast of US$1.56 per share, according to Thomson Reuters I/B/E/S.
Amazon shares plunged 13 percent to US$551.50 after hours on Thursday, following a 9 percent increase in regular trading. They are still up 80 percent over the past 12 months.
Amazon notched its third consecutive profitable quarter for the first time since 2012, but it still left Wall Street wanting more.
“The growth story that investors were looking for ... clearly Amazon has not been able to live up to the hype,” Sarhan Capital CEO Adam Sarhan said.
Net sales rose 21.8 percent to US$35.75 billion, but missed analysts’ expectations of US$35.93 billion.
Excluding a US$1.2 billion unfavorable impact from year-on-year changes in foreign exchange rates throughout the quarter, net sales rose 26 percent compared with the fourth quarter of 2014.
Amazon chief financial officer Brian Olsavsky defended the company’s results on Thursday, saying that foreign exchange rates had an unexpectedly large impact, but overall the company had “a very strong quarter and a strong year.”
Olsavsky reiterated Amazon’s expectation to make continued investments in its cloud division and expand its offering for Prime members with faster delivery and more original video content.
“The investments will ebb and flow over time, but our focus on cost reductions and improvement on customer experience will be constant,” he said.
Amazon forecast sales for the first quarter of between US$26.5 billion and US$29 billion, or up between 17 percent and 28 percent compared with the same quarter last year. It expects operating income of between US$100 million and US$700 million, compared with US$255 million in the first quarter last year.
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