Amazon record profit fails to please Wall Street

Amazon announced on Thursday in its earnings that it recorded a $482 million profit in the fourth quarter of 2015-more money than it did in every combined quarter since the third quarter of 2011.

The company’s total operating expenses rose more than 20 percent to $34.64 billion in the fourth quarter.

AWS has expanded significantly in 2015, setting up new wind farms to power its data centres with renewable energy, opening up new cloud regions and entering the Internet of Things arena. That’s an increase of 35 percent, the researcher said, adding that the average Prime shopper spends $1,100 annually with Amazon, compared with $600 for nonmembers.

“Demand from sellers exceeded even our expectations”, CFO Brian Olsavsky in a call with journalists. The company’s high-growth Amazon Web Services subsidiary, which specializes in “cloud computing” saw revenue spike to $2.4 billion, up 69 percent from the prior year and slightly ahead of analysts’ expectations.

Net income for the fourth quarter stood at $482m ($214m in fourth quarter 2014), on a sales rise of 22% to $35.7bn ($29.3bn in fourth quarter 2014). “This year, we pass $100 billion in annual sales and serve 300 million customers”, said Jeff Bezos, founder and CEO of Amazon.com.

The company has not offered details on its revenue from its Amazon Prime membership service, which offers free delivery and a variety of other services, or its own Kindle and Fire devices. Forecasts had Amazon bringing in just under $36 billion in sales and a net income of $754 million, or $1.56 a share, missing these targets resulted in the falling share price – down 13.43 percent to $550 per share in after-hours trading. Shipping costs were up 37 percent to $4.17 billion, rising as a percentage of sales to 12.5 percent from 10.9 percent a year earlier. But a year ago, Amazon told Fortune magazine the company was fully committed to make India its biggest market after the USA within a decade. According to the business, foreign currency headwind hurt sales.

Though the rate of expansion may be slowing, AWS is still the fastest growing division within Amazon and in an unassailable lead in the cloud infrastructure market, according to Richard Brown, Senior VP for EMEA at Interactive Intelligence.

The company reported f$35.75 billion in sales. Operating income for Web Services climbed to $687 million, up 187 percent, as operating margin rose to 28.5 percent.