A Record Setting Holiday Season Does Not Save Amazon's Earnings
Amazon.com Inc. ( AMZN ), reported earnings after the bell today. EPS was $0.51, significantly below the Zacks Consensus Estimate of $0.71; while Revenues came in at $25.59 billion, below the Zacks Revenue Estimate of $26.05 billion.
During the day, AMZN's stock rose over 5% on heavy volume in anticipation of a strong earnings announcement. But, both North American sales (accounting for $15.3 billion), and International sales (accounting for $10.2 billion) were down from the previous year. Moreover, the Media division posted decreased revenue both domestically, and internationally.
A strong growth area was Amazon Prime, which boasted over a million new subscribers during the holiday season. Furthermore, it is estimated that the company will add another 5 million new subscribers each year over the next several years. But with the weaker than expected Media numbers, it appears as though the holiday subscribers were only interested in the shipping discount. More importantly, it now seems as though Amazon has lost ground to Netflix ( NFLX ) in the streaming media category. Finally, management gave revenue guidance between $18.2 billion and $19.9 billion for Q1 2014, which is slightly below previous expectations.
In afterhours trading, Amazon has dropped over 10% on increased volume. Tomorrow morning Zacks will publish a full detailed earnings report.
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