Even Amazon Had A Bad Holiday Season, Missing Earnings And Revenue Expectations

The stock is down more than 8% in after-hours trading.

Michaela Rehle / Reuters

If the world's biggest, most aggressive, and lowest-cost online retailer had a bad quarter, then it really was one of the worst holiday seasons in years. Amazon reported earnings today that missed expectations on both sales and profit.

The company had sales of $25.59 billion, a 20% increase from the year before but below analysts expectations of $26.06 billion. The earnings miss was bigger, 51 cents per share versus the 66 cents analysts expected, for a net income of $239 million.

Amazon's persistent low profits come from its low prices and a huge amount of investment in the business. The company spent $880 million on property and equipment in the fourth quarter and the Wall Street Journal reported yesterday that Amazon "plans to offer brick-and-mortar retailers a checkout system that uses Kindle tablets as soon as this summer," which could mean giving merchants tablets and card-readers, another large upfront investment for the company in a competitive, low-margin business.

Amazon also said that they expected sales to be between $18.2 and $19.9 billion in the first quarter of 2014, meaning only 13% to 24% growth over the year. The company also said operating income could come in between a loss of $200 million and a gain of $200 million, compared to $181 million in operating income in the first quarter of 2013.

Amazon isn't the only online retailer to report weak results: eBay revenue and sales for the fourth quarter also missed expectations. More confirmation of what many analysts and companies have already described as a weak holiday shopping season is expected to come when retailers report their financial results in February.

"It's a good time to be an Amazon customer," CEO Jeff Bezos said in a statement.

But not so much to be a shareholder, at least today: the stock is down more than 8% in after-hours trading.

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