Amazon’s Sales Miss Estimates, Profit Drops

Amazon’s Sales Miss Estimates, Profit Drops

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

Net income fell to $177 million, or 38 cents a share, from $416 million, or 91 cents, a year earlier, the Seattle-based company said today in a statement. Analysts had projected 16 cents, according to a Bloomberg survey. Sales rose 35 percent to $17.4 billion, compared with an estimate of $18.3 billion.

Chief Executive Officer 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. Amazon’s Prime program, which offers unlimited two-day shipping for $79 a year, boosted expenses over the holiday shopping season, said Jason Helfstein, an analyst at New York- based Oppenheimer & Co.

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

First-quarter operating income may range from a loss of $200 million to a gain of $100 million, the company said. Analysts were projecting $268.1 million. Sales will be $12 billion to $13.4 billion, the company said, compared with an estimate of $13.4 billion.

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

source: bloomberg.com