Amazon Q4 profit surges, but sales fall short

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With the success comes high expectations.

According to this Thursday's announcement, Amazon.com pummeled extensively on Wall Street as holiday sales fell short of expectations. Schroder Investment Management Group increased its stake in shares of Amazon.com by 4.3% in the second quarter.

Average Revenue Estimate for the current quarter is $897.55 Million, according to consensus forecast of 4 analysts. Investors don't doubt the company quite so often anymore; this past quarter was Amazon's seventh consecutive quarterly profit. Approximately 7 million shares changed hands during regular hours, compared to the stock's average daily volume of 4.06 million shares. Revenue rose 22.4% year-over-year (y/y) to $43.74 billion driven by strong sales in the holiday period and a jump in subscriptions for Amazon Prime service. Earlier this week, reports shed light on Amazon's plans for a $1.5 billion air cargo hub in Kentucky for its more than 40 Prime Air planes. The operating margin of AWS is about 31.3 percent of all sales as compared to North American retail business, which has an operating margin of about 5 percent of their net sales. AWS' operating income increased from $580 million in the year-ago quarter to $926 million in the fourth quarter of 2016, accounting for 74% of the company's overall operating income.

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In the UK, Amazon revealed that its relaunched Fashion division sold more than 60m products across its European websites, making the division one of the fastest growing categories.

Bezos said in a statement that Prime Video was now available in some 200 countries and territories. Specifically, Amazon disclosed that its Prime membership in 2014 grew 53 percent, followed by a 51 percent growth rate in 2015. With more hours of content to stream, existing Prime members are going to watch more TV and continue to watch more TV as Amazon adds more content. New benefits were also added to the list, like Prime Reading, Audible Channels for Prime, Twitch Prime and more.

"Our Prime team's customer obsession kept them busy in 2016", said CEO Jeff Bezos. This is up from 722 significant new services and features in 2015.

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Amazon Prime Air, the service that uses drones to safely deliver packages to customers in 30 minutes or less, made its first delivery in December. I talked about in prior calls about the fulfillment center step up.

Click to Enlarge Finally, Friday's conditions in Amazon shares may not have been as fierce as we've been led to believe. In terms of guidance, Amazon expects first quarter revenue to be in the range of $33.25 billion and $35.75 billion, which assumed growth of 14% to 23% year over year.

AWS accounts for an increasingly large percentage of Amazon's net sales, almost doubling in Q3 from the 4.8 percent it represented less than two years ago.

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