Amazon's Revenues Disappoint
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Amazon.com's plans for world domination hit a slight bump on Tuesday.
For years, the retailer has been telling Wall Street to ignore how little money it was making and focus instead on the fact that it was bringing in more and more customers and keeping them so happy they never went anywhere else for anything.
In Amazon's fourth-quarter results, however, investors finally glimpsed off in the distance that growth beginning to flatten. Its revenue rose to $17.43 billion, up 35 percent. Most retailers would die happy with such a jump. But for the e-commerce leader, sales were nearly a billion dollars short of what analysts had been expecting.
Even as investors are panting for Facebook's public stock offering, established Internet stars are disappointing. Amazon's poor showing came on the heels of a similar miss from Google.
Among the reasons for Amazon's missed expectations: Video games were lackluster. There were supply issues from flooding in Thailand. And maybe there was a bit of backlash.
In December, Amazon.com created an uproar by encouraging customers to use a price-checking app on Main Street and in the malls, and then return to Amazon for a better deal. Booksellers, who have long felt themselves in the retailer's cross hairs, were particularly offended. A tentative "buy local" movement sprang up.
In its earnings release, Amazon also warned that it could lose money in the current quarter, offering a range between $100 million in operating income and a $200 million loss.
Shares of Amazon, which rose $2.29 to $194.44 on Tuesday, immediately slumped in after-hours trading by $18.
"With the valuation Amazon is carrying, you got to perform," said Colin Gillis, senior technology analyst for BGC Financial. "You've got to be like Apple -- smash through the numbers people are afraid even to whisper. Instead, they're only making slightly over a penny on every dollar in revenue. That's pathetic in any industry."
First Published February 1, 2012 12:00 am
