com fell late in trading Thursday after the company reported mixed fourth-quarter results, with better-than-expected sales growth but weaker-than-expected earnings, largely due to a loss on the the company’s stake in electric truck maker Rivian Automobile.
Revenue for the company’s closely watched Amazon Web Services unit was a bit below expectations. The company’s first-quarter revenue outlook is well below consensus estimates.
The stock fell 3.4% after hours trading after the earnings report.
This is breaking news. Read an overview of Amazon’s earnings below and check back soon for more analysis.
Amazon’s fourth-quarter financial results, due after markets close Thursday, will likely show the effects of weakening conditions in three of its most important markets: online shopping, cloud computing and digital advertising.
The question facing investors is how much of that is already discounted in the stock price, which last year lost about half its value.
For the quarter, Wall Street consensus estimates for Amazon (ticker: AMZN), as measured by FactSet, call for revenue of $145.9 billion, up 6%. The company’s own forecast calls for revenue of between $140 billion and $148 billion.
Consensus estimates call for fourth-quarter earnings of 17 cents per share, but that figure will be tempered by the market-to-market recognition of the company’s stake in Rivian Automotive (RIVN). The truck maker’s stock fell 44% in the fourth quarter, leading to a paper loss of about $2.3 billion for Amazon.
Amazon sees operating profit of between zero and $4 billion for the period; The street consensus is $2.7 billion.
Meanwhile, Amazon will face intense scrutiny over the performance of all three key segments.
Street estimates predict online store sales of $65.2 billion, down 1% from a year ago. This forecast reflects both a tough comparison to 2021 and slowing consumer spending over the past holiday shopping season. The market will be looking for signs of resilience and evidence that the company has made progress in controlling costs.
Analysts have raised concerns about the outlook for Amazon Web Services, the company’s cloud computing arm, after softer-than-expected guidance last week from its rival.
(MSFT) Azure. In the December quarter earnings release, Microsoft said Azure grew 38% on a currency-adjusted basis in the December quarter, which was actually about a full percentage point ahead of Street expectations. But Microsoft also said business slowed in the quarter and expects Azure growth to decelerate further in the March quarter.
According to Street estimates, AWS is expected to report revenue of $21.8 billion for the December quarter, which would be up 23% from a year ago, compared to growth of 27% in the September quarter. Some cloud providers have worked with their customers to optimize spending, in some cases shifting from à la carte consumption models to contract-based models to make costs more predictable. Street’s current estimates call for further deceleration from here — the consensus is $22.3 billion in AWS revenue in the March quarter, up 21% from a year earlier.
Meanwhile, analyst models predict $11.4 billion in advertising revenue in the quarter, which would be up 17% from a year earlier. But there are also signs of weakness in the advertising market. Microsoft said advertising revenue from LinkedIn and Bing fell short of expectations in the December quarter, and Snap (SNAP) released disappointing results and guidance this week.
In early January, Amazon announced plans to cut just over 18,000 jobs as it struggles to cut costs in a weaker macroeconomic environment.
“These changes will help us pursue our long-term opportunities with a stronger cost structure; However, I’m also optimistic that we’ll be inventive, resourceful and scrappy in this time when we’re not hiring heavily and eliminating certain roles,” CEO Andy Jassy said last month when announcing Amazon staff cuts.
Investors will look for evidence that cost cutting is impacting profitability and free cash flow – the company has seen negative free cash flow growth in four of the last five quarters.
For the March quarter, The Street forecasts revenue of $139.2 billion, up just 4% from a year earlier, with operating profit of $4.2 billion and profits of 28 cents per share.
Write to Eric J. Savitz at email@example.com