Amazon Soars but Investors Sulk
Despite topping $100 billion revenue, including explosive growth for AWS, Amazon failed to achieve analyst expectations Thursday, and Wall Street punished it.
AWS was a high flyer for Amazon.com Inc. (Nasdaq: AMZN) in the fourth quarter, with net sales of $2.4 billion, up 69% year-over-year, according to results reported Thursday. (See Amazon.com Announces Q4 Sales up 22% to $35.7B.)
Operating income for AWS was $687 million, up 186% year-over-year.
Overall, for all of Amazon's business net sales increased 22% in the fourth quarter to $35.7 billion, with net income $482 million in the fourth quarter, or $1 per diluted share, compared with $214 million or $0.45 per diluted share in the year-ago quarter.
For the full year, net sales were up 20% to 107 billion, and net income of $596 billion or $1.25 per diluted share, compared with net loss of $241 million or $0.52 per diluted share in 2014.
For the first quarter of 2016, Amazon expects net sales of $26.5 billion to $29 billion, up 17% to 28%, with operating income of $100 million to $700 million, compared with $255 million in the first quarter of 2015.
With all that good news, why the frowny faces on Wall Street? Analysts predicted a profit of $1.56 per share on revenue of $36 billion. Shares were down 14% in after-hours trading, to $548.90, after closing at $635.35, up about 9% on the day's trading.
In its earnings press release, Amazon reviewed a parade of highlights showing the company's increasing dominance in cloud and video, including:
- Launch of its AWS Asia Pacific (Seoul) Region in Korea and plans to open a new region in Canada.
- General availability for Amazon WorkMail, a business email and calendaring service.
- General availability of AWS IoT, a managed cloud platform for connected device messaging and processing.
- Fire TV is the best-selling streaming media in the US.
- The cloud-based Alexa Skills and Alexa Voice Service partners with companies including Ford, Fidelity, CNN and Bloomberg to provide voice and information services, for the Amazon Echo and enabled devices.
- Prime Video doubled streaming international customers compared with the fourth quarter of 2014.
- Amazon partnered with Showtime, Starz and other video channels to offer streaming programming.