Net sales at Amazon.com rose 17% to $2.98 billion in the fourth quarter ended December 31 and net income fell 42.7% to $199 million. (Without unfavorable exchange rates of $121 million, net sales would have grown 22%.) The company predicted first quarter 2006 sales will rise between 13% and 20% and full year sales will rise between 16% and 23%. Wall Street was disappointed: shares of Amazon dropped nearly 9% to below $40 a share in unusually high-volume aftermarket trading.
Martin Pyykkonen of Hoefer & Arnett told Reuters that revenue growth appears to be slowing. "I'd say it's disappointing because it's continuing to show a revenue deceleration in terms of the 2006 guidance."
In addition, analysts are concerned that the Amazon Prime shipping program, offering unlimited two-day shipping for $79 annually, and free shipping on orders above $25 (together estimated to cost $475 million in 2005) as well as other investments are eroding operating margins. At the same time, Amazon faces more competition in online retailing.
"Investing in their business in order to put in place an infrastructure of the Amazon of tomorrow is becoming, increasingly, an expensive proposition," David Garrity with Investec told the AP.
For the full year, net sales grew 23% to $8.49 billion, and net income was $359 million, down 38.9%.
Among facts offered by Amazon: sales at the company's U.S. and Canadian sites rose 21% to $1.68 billion in the fourth quarter. The rest of the company accounted for 45% of worldwide net sales. In addition, North American sales at what the company calls the media division--including books, music and video--topped $1 billion for the first time in a quarter.
From Shelf Awareness
Martin Pyykkonen of Hoefer & Arnett told Reuters that revenue growth appears to be slowing. "I'd say it's disappointing because it's continuing to show a revenue deceleration in terms of the 2006 guidance."
In addition, analysts are concerned that the Amazon Prime shipping program, offering unlimited two-day shipping for $79 annually, and free shipping on orders above $25 (together estimated to cost $475 million in 2005) as well as other investments are eroding operating margins. At the same time, Amazon faces more competition in online retailing.
"Investing in their business in order to put in place an infrastructure of the Amazon of tomorrow is becoming, increasingly, an expensive proposition," David Garrity with Investec told the AP.
For the full year, net sales grew 23% to $8.49 billion, and net income was $359 million, down 38.9%.
Among facts offered by Amazon: sales at the company's U.S. and Canadian sites rose 21% to $1.68 billion in the fourth quarter. The rest of the company accounted for 45% of worldwide net sales. In addition, North American sales at what the company calls the media division--including books, music and video--topped $1 billion for the first time in a quarter.
From Shelf Awareness
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