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Friday, 31 January 2014 11:54

Amazon starts to suffer

Written by Nick Farrell



Profits down

Amazon has surprised the cocaine nose jobs of Wall Street by missing its profit estimates for the crucial holiday period and warning about a possible operating loss this quarter. Amazon is the world's largest Internet retailer, and it if can’t make piles of dosh then there is something seriously wrong.

According to the company it spent heavily to forge new markets in cloud computing and digital media, expects operating results for the current quarter to range from a $200 million loss to a $200 million profit, compared with a $181 million profit a year ago. All that investment has taken a toll on its bottom line. With revenue growth slowing as Amazon achieves unprecedented scale. 

Executives on Thursday told analysts they were considering an increase in prices for its "Prime" two-day shipping service in the United States, which also includes free video streaming on demand and a book-lending library. The company posted net income of $239 million compared with $97 million in the year-ago quarter.

Net sales grew 20 percent to $25.6 billion in the fourth quarter, versus expectations for just above $26 billion and slowing from the 24 percent of the previous three months. North American net sales in particular grew 26 percent to $15.3 billion, from 30 percent or more in the past two quarters. International sales rose just 13 percent and the company forecast revenue of $18.2 billion to $19.9 billion in the first quarter, a conservative outlook relative to Wall Street's expectation for about $19.7 billion in sales.

Nick Farrell

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