Let’s hope those who bought a ticket Thursday on the Amazon.com (NASDAQ:AMZN) Earnings Day Express departed before the closing bell.
Following a push of more than 5% in the regular session, shares of the omnipresent online retailer were off as much as 10% in after-hours trading following the company saying fourth-quarter revenue was slightly below Wall Street’s expectations – but not nearly as much as its forecast for first-quarter operating income.
Amazon said fourth-quarter profit rose to $416 million, or 91 cents a share, from $384 million, or 85 cents a share, a year earlier. Operating profit of $474 million, which was roughly flat vs. a year ago, took an $18 million hit from foreign exchange rates.
Sales did jump 36% to $12.95 billion from $9.52 billion, but investors who squinted counted this as a miss vs. analysts’ estimates of $13 billion — (but what’s $50 million between friends?)
While latest-quarter EPS beat Wall Street expectations of 88 cents a share, the company’s gross margin of 20.3% came up shy of the anticipated 20.8% figure.
It was the first-quarter forecast, however, that likely pushed the stock lower after hours. Amazon’s revenue projection of $9.1 billion to $9.9 billion bracketed the Street’s expectations of $9.3 billion, but the company said operating profit could fall anywhere from 2% to 34% to $260 million to $385 million.
Wall Street analysts were looking for first-quarter operating income of $473.8 million.
While enjoying the runup in Amazon shares that has accompanied much of the market since last fall, investors were beginning to be concerned how margins would be affected going forward amid company plans to build new fulfillment centers and expand capacity, as well as pour marketing and technology development costs into its popular Kindle e-reading devices and its recent Zappos.com acquisition.
As far as the Kindle is concerned, the company never breaks out sales figures, but Amazon did say it now sells more Kindles than it does paperback books – 115 of the devices for every 100 paperbacks, in fact.
Unfortunately, for near-term operating profit, it seems to be Amazon’s expansion into selling everything else that may stall growth in profit – and the company’s shares.
