Amazon “delivers” disappointing results

FAN Editor

Consumers may love Amazon’s one-day shipping plans, but investors are not feeling the same way after Wednesday’s earnings miss and an after-hours stock drop of more than five percent.

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The company spent more than  $800 million in the second quarter to bolster its free — to Amazon Prime members — one-day delivery program. The e-tail giant is expanding to add more products and more areas but at the same time, it is expanding its investment and spending plenty of cash.

“It’s a big investment, and it’s the right long-term decision for customers,”  Amazon CEO Jeff Bezos said in its earnings release, “And although it’s counterintuitive, the fastest delivery speeds generate the least carbon emissions because these products ship from fulfillment centers very close to the customer — it simply becomes impractical to use air or long ground routes.”

Overall sales were up 24 percent to $70 billion, but the company’s net income decreasing to $2.1 billion compared to last year’s third-quarter income of $2.9 billion.

Part of the reason for the after-hours stock drop was the forward guidance Amazon gave for the fourth quarter. Net sales are “expected to be between $80.0 billion and $86.5 billion, or to grow between 11% and 20% compared with fourth-quarter 2018. This guidance anticipates an unfavorable impact of approximately 80 basis points from foreign exchange rates.” Wall Street had been expecting around $87 billion.

The company also anticipates a drop in operating income which is expected to be between $1.2 billion and $2.9 billion, compared with $3.8 billion in 2018 during the fourth quarter.

Shares this year have gained 17 percent, slightly behind the S&P 500’s rise of 20 percent.

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