A 20 percent rise in sales still led to the company failing to meet expectations on its profits
Amazon‘s financial results for the fourth quarter of 2013 were no surprise: a rise in sales and profits helped by a busy holiday period. But this was not enough for investors, and the company’s value dropped by a tenth.
The online retail giant revealed a 20 percent rise in sales compared to the fourth quarter 2012 to record a total of $25.59 billion (£15.55 billion), ending a run of losses seen in the past two quarters. Net income for the company over the quarter was $239 million (£145 million), up from $97 million during the same period a year ago.
However, these results still fell short of analyst expectations, leading to stock in the company falling 10 percent following the announcement. The company also released its forecast for the current quarter, estimating sales of $18.2 billion to $19.9 billion, which also fell below analyst expectations.
Despite this, executives at the company believed the results were positive. “It’s a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays,” said Jeff Bezos, Amazon CEO (pictured). “In just the last weeks, Forrester, YouGov, and ForeSee have all ranked Amazon #1 – and we believe we’re just scratching the surface of what world-class customer service can be.”
The company’s results revealed that Amazon is heavily investing in research and development, with R&D technology and content costs increasing 38 percent to hit $1.86 billion (£1.13 billion). Despite recent investment in warehouses and delivery technology, net shipping costs for the quarter increased significantly, rising by 19 percent to total $1.21 billion (£735.3 million) as customers flocked to order goods in time for Christmas.
Recent announcements from the company have shed some light on what this money is being spent on. In December the company trolled the pre-Christmas media with plans for delivery via unmanned drone, saying it hoped to implement the technology by 2018. It similarly raised eyebrows with a patent for ‘Anticipatory Shipping’, whereby high-demand products are dispatched to shoppers before they even know they want them.
The company is looking to expand beyond its roots as an online retailer, as its Kindle and Kindle Fire tablets have proved to be a big hit with customers, with an updated version of the latest Fire HDX device rumoured to be arriving soon. The company has also announced it is moving into the desktop virtualisation space, with its new WorkSpaces offering promising to offer major savings over on-premise desktop management.
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