Amazon sinks as revenue misses, guidance disappoints – CNBC

That’s up from the comparable year-ago figures of $1 per share on $35.75 billion in sales.

The online retail technology company reported fourth-quarter earnings that beat analysts’ expectations on Thursday, but revenue that fell short of estimates. It also gave future guidance that was below the average estimate.

Shares dropped more than 4 percent after hours.

The free-spending company has invested heavily in new projects and infrastructure to meet ballooning demand as more shopping moves online. Amazon keeps taking business from traditional retailers, which are closing stores by the hundreds.

But it also offers promotions to have the lowest prices, a “cost of doing business,” chief financial officer Brian Olsavsky said.

“Part of the revenue miss might be the ongoing shift to being a third-party marketplace,” RJ Hottovy, senior retail analyst at Morningstar, told CNBC’s “Closing Bell.” “When that happens, you’re not getting as much of the revenue in there.”

Active “fulfilled by Amazon” sellers grew 70 percent in 2016, Olsavsky said.

“Our shipping costs are tied to the increase in that [fulfilled by Amazon] percentage, and that growth of Amazon-fulfilled units,” Olsavsky said.

Twenty-three new fulfillment centers in the second half of the year, Academy Award–nominated original content with pricey talent, Alexa and Echo devices, and expansion into India were among Amazon’s biggest investments, the company said on a conference call. The company was also pressured by foreign exchange rates.

Amazon boss Jeff Bezos focused on the company’s loyalty program, Prime, noting that “tens of millions of new paid members joined the program in just this past year.” Bezos has been bundling more services into Prime membership, so that customers who once just counted on Amazon for books, clothes and electronics are now able to get household goods, groceries and digital content.

“Prime members can now choose from over 50 million items with free two-day shipping — up 73 percent since 2015,” Bezos said in a statement. “Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two-hour delivery.”


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