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Amazon.com Inc. reports profit trailing analysts’ estimates

The largest Web retailer in the world – Amazon.com Inc. – announced that its fourht-quarter revenue and profit trailed the analysts estimates. These results were facilitated by the fact that sales growth outside the U.S. slowed, and the holiday shipping costs of the company increased.

Amazon.com Inc. made a statement today, explaining that its net income was 239 million dollars, which means 51 cents a share. According to some data compiled by Bloomberg, analysts had forecast an average profit estimated to 69 cents a share. The companys revenue increased by 20% and reached 25.6 billion dollars, and trail the average estimate of 26.1 billion dollars.

The net shipping costs of the company during the fourth quarter increased by 19% and reached 1.21 billion dollars. Amazons fulfillment expenses jumped 29% to 2.92 billion dollars, and its technology and content costs (the ones for research and development) rose by 38% to 1.86 billion dollars.

For years Amazon.com Inc. has been a leader of the e-commerce in the U.S., but its dominance is not global. One of the analysts working for JPMorgan Chase & Co. – Doug Anmuth – wrote in a report cited by Bloomberg: “We continue to believe that Amazon will gain share of overall e-commerce and become a more valuable company over time.”

The growth of the companys international sales is slowing to 13% in the fourth quarter compared to 21% in the year before. At the same time, the companys expenses increase due to the fact that Jeff Bezos, who is the Chief Executive Officer, makes large investments into warehouses in order to speed shipments. Amazon.com Inc. explained in its statement that this is a cost it may try to offset, because it is currently considering raising the price of its Prime delivery service for the first time.

One of the analysts working for Wedbush Securities – Michael Pachter – said for Bloomberg: “What we see is continued growth, but a slowing rate of growth.”

Gene Alvarez, an analyst at the researcher Gartner Inc. said: “The question is how much investing can Amazon do in long-term R&D while still hitting their earnings targets.”

According to CNN Money, the current share price of Amazon.com Inc. is 4.90% up, and its one-year return rate is 1.06% up. The 39 analysts offering 12-month price forecasts for Amazon.com Inc. have a median target of 423.00, with a high estimate of 500.00 and a low estimate of 320.00. The median estimate represents a +4.96% increase from the last price of 403.01.

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