By Jeffrey Dastin and Anya George Tharakan
Amazon.com Inc provided a disappointing forecast for the holiday season quarter while posting earnings that missed Wall Street estimates in the third quarter, as it invested heavily on shipping, video offerings and other projects, sending its shares down nearly 5 percent.Investors and analysts are trying to gauge how much more Amazon plans to invest in its various ventures, and it unnerved some that it offered wide ranges in its outlook."Amazon really doesn't know what's going to happen this quarter," said analyst Jan Dawson of Jackdaw Research, noting investors disapproved of the "uncertainty" in the company's guidance.Amazon forecast net sales of between $42 billion and $45.5 billion for the current-quarter, which includes the all-important holiday shopping season.The $43.75 billion midpoint of the outlook trailed expectations of $44.58 billion, according to Thomson Reuters I/B/E/S, and Amazon also forecast that operating income would range from nothing to $1.25 billion."At the high end of their operating profit guidance, the Street is still $250 million above them," said Michael Pachter, analyst at Wedbush Securities.Amazon Chief Financial Officer Brian Olsavsky told reporters that new warehouses and spending on video drove up third-quarter costs.
"There’s a lot of hiring to support the projects we’re investing in," he said.Total operating expenses rose 31.5 percent to $10.94 billion, including investments in Amazon Web Services and the Prime subscription program internationally.Amazon posted net income that rose to $252 million, or 52 cents per share, from $79 million, or 17 cents per share, a year earlier. It was company's sixth straight profitable quarter.But earnings per share were far short of the average estimate of 78 cents, according to Thomson Reuters I/B/E/S.
Amazon said earlier this month it would hire more than 120,000 seasonal workers in the United States for the holiday season, 20 percent more than last year, highlighting the growing threat the company poses to traditional retailers. The company reported a 29 percent rise in quarterly revenue, in line with expectations, boosted by a big jump in sales from its Prime Day annual shopping festival, strong back-to-school shopping and its market-leading cloud services business.The world's biggest online retailer said its net sales rose to $32.71 billion in third quarter ended Sept. 30 from $25.36 billion a year earlier.Amazon said in July that customers placed 60 percent more orders worldwide in its second Prime Day sale. It did not provide sales figures at the time.
Revenue from Amazon Web Services, the company's cloud services business, surged 55 percent to $3.23 billion, beating the average estimate of $3.19 billion, according to market research firm FactSet StreetAccount.Long known for heavy spending and losses, Amazon has found consistent profit from selling computer storage and services in the cloud.The meteoric rise in sales in the market-leading business reflects how companies globally are turning to Amazon and Microsoft Corp to host their data, leaving once critical software programs and hardware in the dust.Amazon's net sales in North America, its biggest market, jumped 25.8 percent to $18.87 billion in the latest quarter.Up to Thursday's close of $818.36, Amazon's shares had risen 21.1 percent this year. They were down to $779 in after-hours trade. (Reporting by Anya George Tharakan in Bengaluru; Writing by Peter Henderson; Editing by Ted Kerr, Bernard Orr)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
Updated Date: Oct 28, 2016 03:30:06 IST