So, why isn’t Wall Street satisfied? The success of Amazon’s Prime program (bolstered by Amazon Prime Day) and an expanded selection of products helped contribute to the strong demand that was seen during the quarter.
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However, the company’s reinvesting strategy might be discouraging for the investors.
Amazon Web Services (AWS), the cloud computing services suite offered by Amazon, launched its offerings in South Korea and plans to provide services in Canada.
For the full year, turnover increased 20 per cent to $107bn, compared with $89bn the previous year, a 26 per cent increase. The Seattle company’s net income more than doubled to $482 million, or $1 per share, from $214 million, or 45 cents per share a year ago.
Notwithstanding the market’s high expectations, it is important to note that this was Amazon’s largest reported quarterly profit in its 20-year history and it was also the first time in over three years that the company reported a profit in three consecutive quarters. A group of analysts polled by Yahoo expected an average profit of $1.56 a share and revenue of $35.93 billion.
Amazon has posted its most profitable quarter ever, but the result still fell short of Wall Street’s expectations, causing its share value to fall. See Amazon Adds Scheduled Reserved Instances To Server List. “It still feels like day one”, he said in the earnings announcement.
Commenting on the results, Jeff Bezos, founder and CEO of Amazon.com., said: “Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers”, he said in a statement. Amazon is investing in developing data centers for cloud services, organizing shows for its streaming television service as well as enabling speedy delivery through creation of drones. Amazon now employs 30,000 automated pick robots in its chain of worldwide distribution centers, he noted. The number of Prime subscribers now totals 54 million members in the United States, according to market research firm Consumer Intelligence Research Partners (CIRP). Prime members spend more with Amazon than other customers, and enjoy free deliveries.
“The challenge over the next year will be to cut shipping costs without prohibitively raising the cost of Prime membership”.
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Another bright spot for the quarter was Amazon Web Services, Amazon’s cloud-computing services arm. AWS continues to be the fastest growing division within Amazon. It improved from 3.5% in Q4 2014 to 3.9% in Q3 2015 to 4.9% in Q4 2015.
