Amazon's shares plunge as sales, profit miss Wall St estimates
Published 28/01/2016 | 22:53
Amazon.com Inc's holiday quarter profit missed Wall Street's estimates by a wide margin as the world's No. 1 online retailer faced rising operating costs and growth slowed in its cloud services business.
Its shares plunged 12 percent after hours on Thursday, after its quarterly report, following a 9 percent increase in regular trading.
Fourth-quarter net profit rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31 - marking its largest quarterly profit on record - up from $214 million, or 45 cents per share, a year earlier.
That was well below analysts' average forecast for profit of $1.56 per share, according to Thomson Reuters I/B/E/S.
It was the first time Amazon has reported three consecutive profitable quarters since 2012.
Net sales rose 21.8 percent $35.75 billion, but missed analysts' expectations of $35.93 billion.
Net sales from its cloud services business, Amazon Web Services, rose 69.4 percent to $2.41 billion, compared with a growth of more than 78 percent in the third quarter.
Amazon's net sales in North America increased 24 percent to $21.5 billion.
The company's total operating expenses surged more than 20 percent to $34.64 billion in the fourth quarter.
Amazon has been spending on rolling out several new services for members of its $99-a-year Prime loyalty program, including one-hour delivery and original TV programming, to attract customers in a highly competitive online shopping market.
Amazon dominates the worldwide retail e-commerce market, which according to eMarketer totaled $1.67 trillion last year and is expected to grow by 22 percent this year.
Amazon's Prime program is estimated by some analysts to have around 50 million members worldwide. In a decade since its launch, Prime has become an engine of growth for Amazon and an important testing ground for new offerings like one hour delivery and ambitious original TV programming.