Amazon misses Q4 estimates

Amazon.com, the world’s largest internet retailer, missed analysts’ fourth- quarter revenue estimates and reported a 57% decline in profit, dragged down by shipping costs and the money-losing Kindle Fire.

Net income fell to $177 million (€135m), or 38 cents a share, from $416m, or 91c, a year earlier, the Seattle-based company said last night. Analysts had projected 16c. Sales rose 35% to $17.4 billion, compared with an estimate of $18.3bn.

Chief executive Jeff Bezos is squeezing profit margins in search of growth, looking to add customers by pushing free shipping and offering its Kindle devices at cut-rate prices. That has conditioned investors to expect strong sales increases, 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,” he said in an interview. “The bull case just breaks down.”

Amazon shares fell as much as 11% in extended trading after closing at $194.44 in New York. The stock has gained 15% in the past 12 months.

First-quarter operating income may range from a loss of $200m to a gain of $100m, the company said. Analysts were projecting a profit of $268.1m. Sales will be $12bn to $13.4bn, Amazon said, compared with an estimate at the top of that range.

Amazon’s Prime programme, offering unlimited two-day shipping for $79 a year, boosted expenses over the holiday shopping season, said Jason Helfstein, an analyst at Oppenheimer & Co.

“With shipping, if you look at that net loss number as a percentage of revenue, it keeps going up,” he said. “They’re trying their best to offset that in other ways.”

The Prime programme is designed to encourage customers to do more shopping in the long run.

Bloomberg