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Amazon misses Wall Street Expectations

by on29 January 2016

Tiny profit margins

Amazon announced a pretty good quarterly result and immediately suffered from a bad case of falling shares because the cocaine nose jobs of Wall Street think that its profit margins are too thin.

It did not help that the quarterly earnings that fell short of expectations but that was balanced out by its key cloud computing business which continued to grow rapidly.

The company reported f$35.75 billion in sales. Revenue rose 22 percent from $29.3 billion in the previous year. Analysts expected Amazon to post quarterly earnings of $1.56 per share on $35.93 billion in revenue. Its shares fell as much as 15 percent in choppy after-hours trading. 

At least Amazon has now posted profit for three straight quarters, but this time Wall Street is watching the company's margins, the pace of growth for its Web Services business and the expansion of its Prime service, among other factors.

Amazon Web Services revenue, in billionsThe cloud computing business has grown rapidly. Web Services sales rose to $2.41 billion in the quarter, up 69 percent from the previous year. Analysts expected the segment to post $2.38 billion in revenue, according to a StreetAccount consensus estimate. Operating income for Web Services climbed to $687 million, up 187 percent, as operating margin rose to 28.5 percent.

Net revenue in North America rose to $21.5 billion, up 24 percent from the previous year. The same metric in international markets reached $11.84 billion, up 12 percent. Amazon said it took a hit of about $1.2 billion from foreign exchange rate changes.

But ts operating margin as a percentage of net sales was 3.1 percent, up from 2 percent from the previous year. Operating income rose 88 percent to $1.1 billion.

For the full year, net sales jumped 20 percent to $107 billion, while net income climbed to $1.25 per share from a loss of 52 cents per share in 2014. Amazon touted the growth of its Prime program, which saw membership increase 51 percent for the year.

For the current quarter, Amazon expects sales in a range of $26.5 billion to $29 billion. Analysts projected $27.68 billion in sales for the first quarter, according to a StreetAccount consensus estimate.

Amazon sees operating income between $100 million and $700 million, versus a Wall Street estimate for $665 million.


Last modified on 29 January 2016
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