Amazon Revenue Misses Estimates as Holiday Sales Fall Short

The e-commerce company reported lower than expected revenue of $43.74 with better than expected earnings per share of $1.54.

Amazon announced its fourth quarter earnings today, reporting revenues of of $44 billion – a 22% increase over the same quarter past year.

The e-commerce giant posted sales of $43.7 billion, a 22 percent increase from a year ago, the result of a stronger dollar. The company now offers more than 50 million items with two-day shipping, a 73% increase since 2015.

The company forecast first-quarter operating income between $250 million and $900 million, below the consensus estimate of $1.34 billion, according to market research firm FactSet StreetAccount. With the market’s reaction to Amazon’s mixed fourth quarter earnings, however, that gap has widened to $3.7 billion.

That’s the gist from a bullish Amazon AMZN, +0.91% analyst, Shyam Patil of SIG Susquehanna, who said investors should be ready to buy if shares of the e-commerce company fall in reaction to disappointing holiday sales. Both Kotlyar and Anderson pointed out that, while analysts seemed focused on the revenue miss, the company’s net income fared well. Full-year profit views are for Amazon.com, Inc.to earn $4.76 in current year and drop profits by almost 280.8% over last year’s earnings of $1.25. The retail side of the business earned an operating profit of $329 million, with US operations earning $816 million and global operations losing $487 million.

“Our Prime team’s customer obsession kept them busy in 2016”, said Founder and CEO Jeff Bezos. U.S. online sales in November and December totaled $91.7 billion, up 11 percent from the previous year, according to Adobe Systems Inc. Street analysts are looking for an EPS of $12.46 on revenue of $23.3 billion. Prime has become increasingly important to Amazon because members spend much more than other Amazon customers.

Amazon Web Services, the company’s fast-growing and profitable cloud-computing segment, has helped subsidise Amazon’s retail and entertainment ambitions. The company said more than 100,000 of its sellers had sales of more than $100,000 through Amazon.

Alexa-enabled devices were the top-selling products across all categories on Amazon.com this holiday season. The company will also be hiring 100,000 full-time positions in the US over the next 18 months. This week Amazon announced plans to strengthen its distribution muscle by building its first air freight hub – an investment of almost $1.5 billion. With more hours of content to stream, existing Prime members are going to watch more TV and continue to watch more TV as Amazon adds more content.