SEATTLE — Amazon.com Inc. reported disappointing sales in the holiday quarter and said revenue in the current period may miss estimates, raising concerns that rising spending on warehouses, movies, and gadgets isn’t yet translating into faster growth.
Revenue increased 22 percent to $43.7 billion in the fourth quarter, the Seattle-based company said Thursday in a statement. Analysts estimated $44.7 billion, according to data compiled by Bloomberg. Sales in the current quarter will be $33.3 billion to $35.8 billion, the company said, compared with analysts’ projections of $36 billion.
Foreign currency changes reduced fourth-quarter sales growth by 2 percentage points, the company said. In Amazon Web Services, the company’s cloud-services division, revenue was $3.5 billion, up 47 percent from a year earlier. While cloud computing is Amazon’s fastest-growing and most profitable segment, that’s down from a 69 percent rise in the third quarter. Price reductions from the unit contributed to the slowdown, said Ron Josey, an analyst at JMP Securities.
“Expectations got way ahead of themselves in the fourth quarter and this is a reset,” he said.
Shares fell as much as 4.6 percent in extended trading after closing at $839.95. The stock had gained more than 10 percent over the past month in anticipation of a strong holiday period.
Retail competitors, including Walmart, are struggling to match Amazon’s quick delivery on a wide assortment of goods as shoppers shift their spending from stores to websites and smartphones. US online sales in November and December totaled $91.7 billion, up 11 percent from the previous year, according to Adobe Systems Inc. The world’s largest online retailer also attracts customers with its $99-a-year Amazon Prime subscription, which includes delivery discounts, music and video streaming, and photo storage.
Amazon reported operating expenses rose 23 percent to $42.5 billion in the quarter. The spending included $5.7 billion to store and deliver items, particularly those ordered with fast shipping by Prime customers.
The company’s forecast expects less profit than a year ago even though revenue is increasing, which is why investors are concerned about spending, said Michael Pachter, an analyst at Wedbush Securities.
“It means they’re going to spend a ton of money,” Pachter said. “When you see revenue go up and earnings go down, it spooks people.”
“Tens of millions” of new members joined Prime in 2016, chief executive Jeff Bezos said in the statement. Prime had an estimated 65 million US members at the end of September, according to Consumer Intelligence Research Partners in Chicago. The company doesn’t disclose the number of Prime members.
The company’s spending on logistics show no signs of slowing. Amazon announced Monday that it would build a $1.49 billion air hub near Cincinnati to accommodate its growing fleet of cargo planes. The hub and planes make Amazon less reliant on United Parcel Service Inc. and FedEx Corp. to quickly reach customers, and complement its network of warehouses around the country.
Net income was $749 million, or $1.54 a share, from $482 million, or $1 a share, a year earlier. Analysts estimated profit of $1.36 a share.