E-commerce giant Amazon.com (AMZN) saw its shares plunge in after-hours trading after the company weighed in with disappointing earnings that missed expectations on both the top and bottom line and posted lackluster guidance for the fiscal fourth quarter.
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The online retailer reported net income fell 73% to $63 million, or 14 cents a share, compared with year-ago profit of $231 million, or 51 cents a share.
Net sales rose 44% to $10.88 billion during the quarter, up from year-ago sales of $7.56 billion.
The results were well below analyst expectations, especially on the bottom line. The Street was looking for earnings of 24 cents a share on revenue of $10.93 billion, according to a poll by Thomson Reuters. The results also missed the unofficial expectation, or whisper number, which was actually two cents ahead of consensus, at 26 cents a share, according to WhisperNumber.com.
Looking to the fourth-quarter, the company expects sales to range between $16.45 billion and $18.65 billion, mostly lower than the Street’s forecast for revenue of $18.10 billion. Fourth-quarter operating income is expected to fall somewhere between a $200 million loss and a $200 million profit, a 142% to 47% drop in operating earnings, compared with the year-ago quarter.
The company boasted of strong sales of its Kindle device, since the launch of its Kindle Fire tablet and its new smaller, lighter line of e-readers. CEO Jeff Bezos said Sept. 28 was the “biggest order day ever” for all of its Kindle devices, beating out holiday peak days.
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“In the three weeks since launch, orders for electronic ink Kindles are double the previous launch,” said Jeff Bezos, founder and CEO of Amazon.com, in a statement. “And based on what we're seeing with Kindle Fire pre-orders, we're increasing capacity and building millions more than we'd already planned."
Amazon’s third-quarter earnings miss extends what has already been a disappointing week for the tech sector. On Monday, DVD and content-streaming service Netflix (NFLX) gave a dismal outlook and reported losing more than 800,000 subscribers after it implemented a price-hike and bungled an attempt to rebrand its mail-order DVD business in the third quarter.
Amazon shares fell $10.46, or 4.4%, in Tuesday’s session, ahead of the third-quarter results. The shares were off another $31.65, or nearly 14%, in after-hours trading.