Amazon revealed its Q4 2013 results but shares of the company dropped as earnings missed Wall Street estimates.
On Thursday, January 30, the online retailer announced its financial results for the quarter ended 31 December, 2013.
Amazon reported that net sales increased 20 percent to $25.59 billion in Q4 2013, when compared with $21.27 billion in Q4 2012. However, analysts estimated net sales of $26.1 billion, on average. The world's biggest e-retailer announced net income of $239 million, or 51 cents a share, during Q4 2013. However, analysts on average had predicted profit of 69 cents a share.
Operating income for the company also increased 26 percent to $510 million during the quarter, when compared to $405 million in the same quarter of 2012. Amazon revealed that the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $7 million.
"It's a good time to be an Amazon customer. You can now read your Kindle gate-to-gate, get instant on-device tech support via our revolutionary Mayday button, and have packages delivered to your door even on Sundays," said Jeff Bezos, founder and CEO of Amazon.com. "In just the last weeks, Forrester, YouGov, and ForeSee have all ranked Amazon #1 - and we believe we're just scratching the surface of what world-class customer service can be."
Technology and content costs also increased 38 percent to $1.86 billion.
Amazon also pointed out that net shipping costs in the quarter soared 19 percent to $1.21 billion. Delays in shipping during the busy holiday season led fulfillment expenses to increase 29 percent to $2.92 billion.
During the earnings call the online retailer also indicated its plans to raise the price of its Amazon Prime service, which currently costs $79 per year. The Amazon Prime service gives its members some benefits such as free two-day shipping and access to Amazon Prime Instant Video. The company has not revised the price of Amazon Prime in nine years; however, fuel and shipping cost has increased, which has led Amazon to review the price of the service.
"Amazon is working hard to increase capacity for the Prime program. In December, Prime was so popular that Amazon limited new Prime membership signups during peak periods," per Amazon.
Amazon's share prices fell as much as 13 percent to $352 in extended trading after the company posted its financial results. On Friday afternoon, the shares were trading down 9.10 percent at $366.32 on the Nasdaq.
