Amazon posts 4Q profit, results miss Street expectations

After delighting investors with a surprise profit in the middle of 2015, chief executive officer Jeff Bezos has chose to boost spending again, betting that speedier shipping, intelligent home gadgets and Web technology and services will deliver robust sales growth down the road. The company’s profits more than doubled year-on-year during the fourth quarter from $214 million in 2014 to $482 million in 2015. They are still up 80 per cent over the past 12 months.

AWS, its cloud unit, remained the bright spot in Amazon’s earnings.

“As far as I am concerned, Amazon is now out of the FANG group”, he said, referring to the group of high-growth tech stocks that includes Facebook, Netflix and Alphabet, formerly known as Google.

The results marked the third consecutive quarterly profit for the company, which is a heavyweight in online retail as well as cloud computing, and more recently streaming video.

The head of retail analyst firm “Conlumino”, Neil Saunders, was quoted by Reuters as saying: By comparative retail standards, Amazon’s level of profitability is still painfully weak.

The company has posted its fourth-quarter earnings, revealing Amazon Web Services is still a very profitable division.

For Q4, analysts expect the e-commerce giant to post $36 billion in revenue with earnings of $1.58 a share.

Non-GAAP earnings were $1.00 per share on a revenue of $35.75 billion.

Sales were up 22pc to $35.7bn from $29.3bn and profits were up to $482m from $214m previous year.

They talked about some pretty major Prime growth: Amazon says that worldwide Prime memberships have increased 51 percent in 2015 compared to the year before. Total operating expenses rose to $34.64 billion from $28.74 billion in the prior-year period.

One of those investments is making Prime Now deliveries, which are free two-hour deliveries to its Amazon Prime customers in 14 metropolitan areas.

Amazon guided the first quarter operating income between a wide range of $100 million to $700 million, versus $255 million in the first quarter 2015.

Earlier this week, the Consumer Intelligence Research Partners (CIRP) group predicted that Amazon increased its U.S. Prime membership base by 35 percent in 2015.

Sales from North America jumped to $21.50 billion from $17.33 billion last year, while global sales rose to $11.84 billion from $10.58 billion last year.

But ts operating margin as a percentage of net sales was 3.1 percent, up from 2 percent from the previous year.

Analysts had forecast $27.6 billion in sales and $400.3 million in profit. The stock was up 100% past year.