Amazon.com Inc. projected lackluster revenue in the current quarter, worrying investors that the company’s main e-commerce business has stalled and sales growth has slowed in the cloud computing division. The shares fell in extended trading.
(Bloomberg) — Amazon.com Inc. projected lackluster revenue in the current quarter, worrying investors that the company’s main e-commerce business has stalled and sales growth has slowed in the cloud computing division. The shares fell in extended trading.
Revenue will be $121 billion to $126 billion in the period ending in March. Analysts, on average, estimated $125.5 billion.
While Amazon beat expectations for the holiday shopping season, online store revenue fell 2% — that’s four out of five quarters of year-over-year declines. Amazon Web Services, which has long generated most of the company’s profit, is suffering because some big corporate customers are reassessing their technology spending after lavish outlays on cloud services during the pandemic.
“The expected deceleration in AWS was even worse than expected and means Amazon can’t rely on that business units’ operating profits as much in coming quarters,” said Andrew Lipsman, an analyst at Insider Intelligence.
Chief Executive Officer Andy Jassy is cutting costs after rapid hiring and expansion during the pandemic left Amazon saddled with too many warehouses and employees. The company has slowed the opening of new buildings, abandoned some facilities and started axing experimental teams. The Seattle-based company started a new round of job cuts last month that will eventually total 18,000 employees.
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Jassy said Thursday in a statement reporting the results.
Revenue increased 9% to $149.2 billion in the period ended Dec. 31. Analysts, on average, estimated $145.8 billion, according to data compiled by Bloomberg.
AWS, the Seattle-based company’s cloud-computing division, generated sales of $21.4 billion, an increase of 20% from a year earlier. The unit’s performance fell just short of estimates and followed rival Microsoft Corp.’s disappointing results for its cloud unit last week.
On a call with reporters, Chief Financial Officer Brian Olsavsky said the company is seeing continued slowness in AWS sales so far in the current quarter.
In October, Amazon forecast the slowest holiday-quarter growth in its history, projecting that sales would rise just 2% to 8% as shoppers pulled back after binging during the pandemic.
Shares fell 4% in extended trading after closing at $112.91 in New York. The stock was up 34% this year after losing half of its value in 2022 in what was the company’s worst performance in more than a decade.
(Updates with online store revenue in the third paragraph.)
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