Amazon's Q4: Holiday quarter disappoints but cloud keeps growing

A silver lining for Amazon could be its cloud unit, which continues to grow quarter after quarter.
Written by Rachel King, Contributor

Amazon published fourth quarter and year-end financial results after the bell on Thursday, and it turns out the holidays weren't as bright as expected for the online retail giant.

The Seattle-headquartered corporation reported a net income of $482 million, or a dollar per share (statement), for Q4 2015.

Non-GAAP earnings were $1.00 per share on a revenue of $35.75 billion.

But Wall Street was looking for earnings of $1.63 per share with $35.98 billion in revenue for the holiday quarter.

Harking back to a familiar pattern on tech earnings reports throughout the year affecting everyone from Oracle to Google to Intel, Amazon attributed less-than-desirable results for both the quarter and the year to "unfavorable impact from year-over-year changes in foreign exchange rates."

The disappointment also sent Amazon shares plummeting by as much as nearly 15 percent in the first 20 minutes of after-hours trading.

CEO and founder Jeff Bezos completely avoided acknowledging the miss in his prepared remarks, instead concentrating on annual sales and customer milestones.

"Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers," said Bezos. "And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like Day 1."

For the company at large, Amazon grew sales 20 percent in 2015 to $107.0 billion in annual revenue, compared with $89.0 billion for 2014.

The silver lining for Amazon continues to be its cloud unit, which continues to grow quarter after quarter and routinely impressing analysts since Amazon first started breaking out results on quarterly reports last spring.

Amazon Web Services posted $2.405 billion in revenue during the fourth quarter, up from $2.08 billion the previous report published in October.

2015 proved to be a big year for AWS in general as it rolled out 722 new services and features over the course of the year -- a 40 percent increase from 2014's progress.

As the portfolio and the customer base continues to grow, AWS has expanded its data center footprint to 32 Availability Zones across 12 geographic regions worldwide with plans to add five more regions and 11 Availability Zones in the next year. Among the plotted locations for data centers and related renewable energy projects include Ohio, Canada, China and the United Kingdom.

Amazon Business, a corporate-focused digital marketplace that also launched in 2015, has since courted more than 200,000 businesses ranging from small businesses to Fortune 500 companies in its first eight months of release.

For the current quarter, Wall Street is looking for non-GAAP earnings of 81 cents per share with $27.71 billion in revenue.

Amazon responded with a revenue outlook of $26.5 billion to $29.0 billion, translating to growth between 17 and 28 percent from the first quarter 2015.

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