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Amazon is still raking in the cash, but its slower than expected customer growth in its web services offerings and a weaker than expected sales outlook for the holiday season shook investor confidence and caused the stock to slide around 5 percent in after-hours trading.
Profits for the company continued to soar, reaching $2.9 billion, or $5.75 per share, up from $2.5 billion in the second quarter, and handily beating analysts’ estimates of $3.14 per share. Those earnings were offset by slower revenue growth at $56.6 billion versus the $57.1 billion analysts had expected.
Potentially more worrying for investors were the figures that Amazon predicted for the all-important holiday fourth quarter. The company said it was expecting $66.5 billion to $72.5 billion in sales, versus analyst estimates of somewhere around $73.8 billion for the giant e-commerce company.
Sales from Amazon Web Services also likely weighed on investors’ minds. The company managed to just about hit analyst expectations, with sales from Web Services coming in at around $6.7 billion, but that number indicates that growth for AWS is slowing.
The company, never afraid of taking big swings on new products and services, launched a new family of devices in September (that included integrations for Alexa with pretty much everything but the kitchen sink).
Those Alexa-enabled devices continue to be a bright spot for the company, and one that will hopefully lead to higher sales during the holiday season. Alexa-enabled home devices now include 20,000 gadgets from 3,500 brands — including, somewhat inexplicably, the AmazonBasics Microwave.
Amazon Web Services weren’t the only area that showed slowing growth, with international sales also slowing seeing $15.5 billion in sales versus analyst expectations of $16.5 billion in international revenue.
Amazon’s predictions for the fourth quarter would mean sales growth of somewhere between 10 percent and 20 percent. That’s a lower rate than the 30 percent growth rate the company enjoyed in the fourth quarter last year. Meanwhile, revenue predictions for the fourth quarter would be flat on an annual basis, which is something that investors don’t love.
Ultimately, the company said it was seeing good cost performance as it wrings more out of the existing customers that it has despite facing headwinds coming from its commitment to increase compensation among some hourly workers to $15 per hour.
Both Amazon’s Prime service and AWS continue to be the gifts that keep on giving for the company.
Amazon announced earlier in the year that it had snagged more than 100 million members. After hitting that milestone, the company summarily raised the price of a subscription.
The company continues to push hard into offline retail, expanding its Amazon Go store and opening a new four-star store in New York.
from www.tech-life.in
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