Amazon sparks fears with sales forecast

Amazon sparks fears with sales forecast

Amazon sparks fears with sales forecast

The logo of Amazon is pictured inside the company's office in Bengaluru, India, April 20, 2018.

Amazon's Black Friday and Cyber Monday efforts were well received as net sales increased 20 percent to $72.4 billion in the fourth quarter, the e-commerce giant revealed in its latest earnings report.

However, Amazon forecast first-quarter net sales of $56 billion to $60 billion, lower than the $60.83 billion expected from analysts polled by FactSet.

In the third quarter, Amazon pulled in US$2.9 billion in quarterly profit, with sales that climbed almost 30 per cent to US$56.6 billion. Amazon shares are up about 14 percent this year on investor optimism that the company can maintain growth and profitability, and closed at $1,718.73 before the results were released.

Amazon Web Services - Amazon's cloud hosting platform that powers a significant chunk of the public internet - generated $7.430 billion Dollars (roughly $9.75 billion CAD) in Q4 2018.

Amazon stock is up 18% over the past year.

The company reported its third record profit in a row, capitalizing on a strong holiday retail season and its growing, high-margin businesses such as cloud computing and advertising.

More customers signed up for Prime worldwide in 2018 than ever before. The company's "other" revenue category, which is mostly advertising, grew 95 percent to $3.39 billion in the quarter. Amazon's revenue of nearly $72.4 billion in the period also exceeded Street forecasts of $71.7 billion, according to Zacks Investment Research.

"Alexa was very busy during her holiday season", Bezos said.

Nicholas Hyett, analyst at Hargreaves Lansdown, said the online retailer was "tightening its grip" on its customers with add-on services such as Amazon Prime which offer free delivery and other benefits.

Shares were down slightly in after-hours trading.

A tight labor market, rising shipping costs and money-losing investments overseas remain threats.

Wall Street expects AWS to generate fourth-quarter revenue of $7.2 billion.

Annual net income increased to $10.1 billion United States dollars (roughly $13.26 billion CAD) in 2018, compared to $3.0 billion USD (roughly $3.94 billion CAD) in 2017.

Amazon has historically delivered relatively little profit as it fulfills Bezos's strategy of investing to stay ahead.

Making Amazon more profitable still are ad sales. Sales from Amazon's physical shops - from Whole Foods to its bookstores and Amazon Go - were down three per cent, though Whole Foods saw six per cent growth in revenue when you adjusted for overlapping financial quarters.

Bezos, the world's wealthiest man and Amazon's biggest shareholder, announced earlier this month that he was divorcing MacKenzie, his wife of 25 years.

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