Amazon (NASDAQ: AMZN) is the latest company to miss analyst estimates, and its share price is taking a beating in after-hours trading. Not even counting the $558 million that Amazon lost due to currency exchange issues, the retailer still managed to come up short.
You might imagine that a 24 percent year-over-year increase in net sales would have been enough to satisfy the market, but apparently not. Even a 22% year-over-year increase in revenue that totaled $43.7 billion didn’t make the mark. Estimates were for $44.7 billion. Missing estimates by a full billion results in significant price slashing on the Street.
That certainly would have been more than bad enough all by itself. So it really didn’t help matters when Amazon also revealed that their revenue outlook for Q1 2017 will probably also fall short of what is expected.
The Seattle e-commerce giant expects revenue for that period to fall somewhere between $33.25 billion and $35.75 billion. Unfortunately, analyst estimates were for $35.95 billion.
However, the news wasn’t all bad. Amazon solidly beat the consensus estimate for earnings per share of $1.35 by coming in at $1.54. But the big news was the success of Amazon’s cloud computing division, Amazon Web Services (AWS).
Although analysts have expressed concern that increased competition from Google and Microsoft the cloud computing arena could result in a correlating increased price competition. Yet, Amazon is firmly holding its own, with revenue of $3.53 billion in the fourth quarter that represented a 47 percent increase over the same quarter last year.
Even more impressive, is the total year’s revenue of $12.2 billion that is a full 55 percent increase over last year. This sector is still in its infancy, so there’s no way to be sure yet how far its potential may reach. But Amazon has made a strong start out of the gate.