Amazon hit hard after 57% decline in profits

Swing...and a miss.

Shares of Amazon were not faring well in after-hours trading Tuesday after the world’s largest Internet retailer missed analysts’ fourth-quarter revenue estimates and reported a 57% decline in profit, dragged down by shipping costs and the money-losing Kindle Fire. The company also said it may lose money in the first quarter, a sign the company is continuing to spend heavily on expansion and new ventures.

Fourth-quarter net income was $177 million, or 38 cents per share, down from $416 million, or 91 cents per share, a year earlier. Revenue came in at $17.43 billion, up 35% from a year ago. The Street was expecting a fourth-quarter profit of 16 cents per share on revenue of $18.3 billion.

Looking ahead, Amazon forecast first-quarter operating results ranging from a loss of $200 million to a profit of $100 million. That includes about $200 million for stock-based compensation and other expenses. The Street was expecting first-quarter operating results of $426.5 million.

Commenting on the results, an analyst at Oppenheimer & Co. said Amazon's CEO 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.

Amazon.com (AMZN : NASDAQ : US$194.90), Net Change: 2.75, % Change: 1.43%, Volume: 8,151,442

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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