Amazon Stock Sinks As Sales Miss Estimates

By Bizclik Editor

 

The world’s still awaiting an update about the Facebook IPO, but in the mean time, it looks like stock for another tech company is making headlines.

Amazon (AMZN) shares fell sharply on Wednesday morning, after the company reported its surprising fourth-quarter sales, which missed estimates.

Even though Amazon’s revenue grew 35 percent during last quarter at $17.4 billion, it still missed analysts’ expectations by nearly $1 billion. Poor Amazon performance can mostly be attributed to slow sales of its entire media business, including books, DVDs, Kindle tablets and content consumed on said tablets. Sales of those items grew 15 percent, but that wasn’t enough for investors.

However, Amazon’s earnings fared slightly better than expected. The Seattle-based company posted net income of 38 cents per share, while Wall Street expected 17 cents.

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Some analysts question whether or not Amazon will be able to pick up its pace and return to the levels of growth it experienced throughout last year.

“While Amazon.com continues to be our highest-conviction, long-duration idea, we believe the stock will be challenged over the near term due to low margins and continued ambiguity around sales growth,” wrote Morgan Stanley analyst Scott Devitt.

Amazon didn’t announce exact sales figures for the Kindle Fire Tuesday, but it did say that for the current, first quarter; it expects to report total revenue of between $12 billion and $13.4 billion. According to Thomson Reuters, analysts were seeking first-quarter revenue of $13.41.

Amazon Chief Financial Officer Tom Szkutak said during a conference call that the company will continue to spend aggressively in order to take advantage of new opportunities and that Amazon is “very encouraged” by the rate of content sales for the Kindle Fire and other devices.

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