Amazon Stock Fell Because Record Profits Aren’t Enough

Amazon wage hike pays off as it reveals record profits

Shares were down 4 percent in pre-market trading at 7:32 a.m.in New York Friday. In discussing the results with analysts on a conference call, Amazon execs said AWS had added a number of tech and sales positions, while CEO Jeff Bezos said earlier that Alexa had bolstered its roster of boffins.

Amazon expects sales to grow between 10% and 18% in the first quarter, slightly below analyst forecasts.

In its last-reported quarter, total revenue grew 29% year over year but fell short of Street estimates.

"Right now we are working through some next issues in both cities", Chief Financial Officer Brian Olsavsky said on the call.

Amazon, the world's largest company by market capitalisation, reported improved earnings and profits late on Thursday.

But Saunders said sales growth appears to have slowed as Amazon matured, raising questions about its future path.

A worker sorts parcels at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017.

Sales will be $56 billion to $60 billion in the current period, the company said Thursday, compared with analysts' average estimate of $61 billion. But this year investments will rise, though Olsavsky did not detail where or how much. Amazon as a whole posted operating profits of $3.8 billion in the fourth quarter, and Amazon Web Services was responsible for $2.1 billion of those profits, or roughly 55 percent. In the third quarter, the company spooked investors by issuing Q4 revenue guidance in the range of $66.5 billion and $72.5 billion, well below the consensus estimate of $73.79 billion.

The results demonstrate that Amazon continued its "relentless assault" on other retailers over Christmas, Nicholas Hyett, Equity Analyst at Hargreaves Lansdown, said. The potentially weak revenue outlook highlighted concerns about how Amazon will do in India, its biggest worldwide expansion target, where rules on foreign-owned e-commerce companies are changing. The company said a record number of customers signed up for its "Prime" subscription service in 2018, including "tens of millions" of consumers during the holiday shopping season.

FILE PHOTO: The logo of Amazon is pictured inside the company's office in Bengaluru, India, April 20, 2018. The Echo Dot, Amazon's most affordable smart speaker, was the top selling product on Amazon, from any manufacturer, in any category. Amazon has not fully rolled out an attribution program it tested past year, which let advertisers detect when their digital ads led to sales on its site. The company now ranks alongside Alphabet Inc.'s Google and Facebook Inc.as titans in marketing, letting these same merchants pay for high placement in Amazon's search results.

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