Amazon warns of possible first-quarter loss, stock falls

SEATTLE Thu Jan 30, 2014 6:01pm EST

A zoomed image of a computer screen showing the Amazon logo is seen in Vienna November 26, 2012. REUTERS/Heinz-Peter Bader

A zoomed image of a computer screen showing the Amazon logo is seen in Vienna November 26, 2012.

Credit: Reuters/Heinz-Peter Bader

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SEATTLE (Reuters) - Amazon.com Inc missed Wall Street's profit estimates for the crucial holiday period and cautioned investors about a possible operating loss this quarter, pushing its shares down more than 4 percent on Thursday.

The world's largest Internet retailer, which has spent heavily to forge new markets in cloud computing and digital media, expects operating results for the current quarter to range from a $200 million loss to a $200 million profit, compared with a $181 million profit a year ago.

Amazon has been trying to sustain its red-hot pace of growth by investing heavily in its retail and distribution network across the globe, while expanding into the technology realm with Kindle digital devices, cloud computing services and online media.

That has taken a toll on its bottom line. With revenue growth slowing as Amazon achieves unprecedented scale, analysts said investors may be getting impatient.

"Amazon's gotten so many hall passes on earnings," said Colin Gillis, an analyst at BGC Financial, adding that pressure on the company to produce profit is now rising. "Perhaps the market expectations for them to deliver income, as their revenue growth slows" is increasing, said Gillis.

Executives on Thursday told analysts they were considering an increase in prices for its "Prime" two-day shipping service in the United States, which also includes free video streaming on demand and a book-lending library.

But they had made no final decision on that.

PATIENCE A VIRTUE?

The company posted net income of $239 million, or 51 cents per share, compared with $97 million, or 21 cents per share, in the year-ago quarter. Analysts had expected 66 cents, on average.

Net sales grew 20 percent to $25.6 billion in the fourth quarter, versus expectations for just above $26 billion and slowing from the 24 percent of the previous three months.

North American net sales in particular grew 26 percent to $15.3 billion, from 30 percent or more in the past two quarters.

International sales rose just 13 percent, below Wall Street expectations for around 14 percent to 15 percent growth.

The company forecast revenue of $18.2 billion to $19.9 billion in the first quarter, a conservative outlook relative to Wall Street's expectation for about $19.7 billion in sales.

Shares in Amazon were down almost 4 percent at $388, from a close of $403.01 on the Nasdaq. The stock was down more than 10 percent at one point in extended trading.

Fourth-quarter income from operations rose to $510 million from $405 million in the same quarter of 2012.

(Reporting by Bill Rigby and Edwin Chan; editing by Andrew Hay)

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