Amazon. com reported fourth-quarter revenue and profit that trailed analysts' estimates after sales growth slowed outside the US and holiday shipping costs surged.
Net income was $239 million, or 51 cents a share, the company said today in a statement. Analysts on average had projected profit of 69 cents a share, according to data compiled by Bloomberg.
Revenue rose 20 per cent to $25.6 billion, trailing the $26.1 billion average estimate.
Amazon's dominance of US e-commerce isn't translating globally, with international sales growth slowing to 13 per cent in the quarter from 21 per cent a year earlier. Meanwhile, expenses are climbing as chief executive Jeff Bezos pumps money into warehouses to speed shipments, a cost Amazon may try to offset as it considers raising the price of its Prime delivery service for the first time, the company said today.
“What we see is continued growth, but a slowing rate of growth,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles who rates the stock the equivalent of a hold.
Amazon shares fell as much as 13 per cent to $352 in extended trading after the report. The stock gained 4.9 per cent to $403.01 at the close in New York and has climbed 48 per cent in the past year, more than double the 19 per cent advance in the Standard and Poor’s 500 Index.
Net shipping costs in the period jumped 19 per cent to $1.21 billion. Fulfillment expenses surged 29 per cent to $2.92 billion. Technology and content costs -- for research and development -- increased 38 per cent to $1.86 billion
“The question is how much investing can Amazon do in long- term RandD while still hitting their earnings targets,” said Gene Alvarez, an analyst at researcher Gartner.
The e-commerce market is expected to climb 15 per cent this year to $300.6 billion, according to researcher EMarketer. Cyber Monday, the first Monday after Thanksgiving, was the heaviest web-spending day on record, with consumers shelling out more than $2 billion, according to ComScore.
The record holiday season brought some snafus as well. Amazon and other retailers issued rebates after United Parcel Service and FedEx, overwhelmed by demand, were late in delivering some packages to customers.
“It’s entirely possible that they have trained consumers to just buy Christmas presents at the last second, and weren’t prepared for the logistical issues,” Mr Pachter said.
Tom Szkutak, Amazon’s chief financial officer, said today on a conference call with analysts that the company is considering raising the price of its $79-a-year Prime service, which includes two-day shipping as well as streaming online movies and books. The company hasn’t raised the price since creating Prime nine years ago, and fuel and shipping costs have increased, he said.
“Customers like the service and they are using it a lot more,”Mr Szkutak said.
Revenue growth slowed last year to 22 per cent from 27 per cent in 2012 and 41 percent in 2011. Sales in North America jumped 26 per cent in the period to $15.3 billion. Operating margin, a metric of profitability, rose to 2 per cent from 1.9 per cent a year earlier.
The stock rally, which dates back to late 2008, has driven Amazon’s price-to-earnings ratio for the past 12 months to more than 1,400 -- about 85 times higher than the average of companies in the S&P 500.
Amazon said first-quarter sales will be $18.2 billion to $19.9 billion, compared with the average analyst estimate of $19.7 billion, according to data compiled by Bloomberg. For operating income, results will range from a loss of $200 million to a profit of $200 million.
The company’s loyal band of investors is betting on Mr Bezos’s ability to deliver continued sales growth as Amazon adds online video options, bolsters its line of Kindle devices, wins business customers for its cloud servers and expands its grocery-delivery service. (Reuters)
