Amazon's shares decline after sales miss forecasts
Amazon.com Inc fell as much as 7.3 per cent in German trading after sales missed estimates
Frankfurt: Amazon.com Inc fell as much as 7.3 per cent in German trading after sales missed estimates, signalling that its investments in media services, Kindle devices and shipping promotions have been slow to pay off.
Fourth-quarter revenue was $17.4 billion, the Seattle-based company said yesterday in a statement, trailing the $18.3 billion estimated by analysts in a Bloomberg survey.
Net income fell 57 per cent to $177 million, or 38 cents a share, from $416 million, or 91 cents, a year earlier.
Amazon, the world's largest internet retailer, got less revenue from digital media than anticipated, especially in the video-game market.
Squeezing margins
The company also is relying more on third-party sellers, which can bolster profit but generate less revenue than direct sales. Amazon has conditioned investors to expect stronger growth, making the latest results disappointing, said Colin Gillis, an analyst at BGC Partners LP in New York.
"To miss on the top line, that's what breaks the momentum," said Gillis, who recommends selling Amazon stock.
Amazon fell as much as €10.64 in Frankfurt and was down 6.6 per cent to the equivalent of $179.23 as of 9:36am.
First-quarter operating income may range from a loss of $200 million to a gain of $100 million, the company said.
Analysts were projecting a profit of $268.1 million. Sales will be $12 billion to $13.4 billion, Amazon said, compared with an estimate at the top of that range.
Chief Executive Officer Jeff Bezos is squeezing margins in search of growth, looking to add customers by pushing free shipping and offering its Kindle devices at cut-rate prices.
