Amazon Q4 Revenue Up 22 Percent, but Softer Than Expected

Amazon’s shares traded lower this morning ahead of the company’s fourth-quarter results, signaling that the market wasn’t sure what it was going to get.

Investors may be feeling justified, as Amazon’s revenue did come in light for the holiday quarter. (In after-hours trading, though, the stock is up nearly nine percent on strong operating income.)

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Amazon said its revenue totaled $21.27 billion in the fourth quarter, falling short of analysts expectations, which were projecting revenue of $22.3 billion.

Amazon’s number, however, was in line with its own guidance. The e-commerce giant was forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Historically, Amazon has been able to grow at twice the rate of the overall e-commerce market during the fourth quarter, and since eBay filed strong results, it was expected to do the same. But with sales growing only 22 percent year over year, the company missed that typically reliable benchmark.

According to comScore, online spending in the U.S. totaled $42.3 billion, representing a 14 percent increase over 2011. (Excluding unfavorable impact from foreign exchange rates in the quarter, Amazon net sales grew 23 percent compared with fourth quarter 2011.)

For Amazon, the story is all about its revenue, since it often invests all of its profits back into the business.

In terms of the company’s bottom line, results were also in line with Amazon’s guidance, but then again, it left itself a lot of room for error.

It had projected that results could be anywhere from an operating loss of $490 million to an operating profit of $310 million. In the fourth quarter, it reported operating income in the upper end of that range, increasing 56 percent year over year to $405 million.

Investors liked those results, and in after-hours trading, pushed the stock up $22.44, or 8.6 percent, to $282.79. That’s much closer to its recent 52-week high of $284 a share.

Its net income, however, decreased 45 percent to $97 million, or 21 cents a share. That, too, fell short of analyst expectations, which wanted Amazon to generate a profit of 29 cents a share.

Clearly, rather than making money, Amazon has continued its emphasis on investments by continuing to sink money into building more warehouses and developing new technology and services, like streaming video deals, cloud computing and its Kindle hardware division.

Investors want to know if that will continue this quarter.

For the first quarter, the company is projecting net sales to fall between $15 billion and $16.6 billion, representing growth of 14 percent to 26 percent. But again, there’s a wide range of expectations for its operating results, which are being projected to fall between a loss of $285 million and a profit of $65 million.

For the full year, net sales totaled $61.1 billion, up 27 percent year over year. The company also reported a net loss of $39 million, or nine cents a share.


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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus