Amazon.com and its Web Services unit grew inside the fourth quarter of 2013 but not enough to thrill investors — Amazon stock dropped 9.5%.
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Amazon reported its fourth-quarter results Thursday. Although revenue grew 20% from a year earlier to $25.59 billion, its stock slumped in trading after the announcement.
Net income greater than doubled to $239 million, or 51 cents per share, throughout the key holiday shopping quarter of October-December. The Wall Street analyst consensus earlier than the report had pegged earnings 74 cents per share on revenue of $26.05 billion.
The results seemed to trigger disappointment in Amazon investors, even if full-year revenue grew 22% to $74.45 billion. Operating costs grew at a slower rate of 10%, but Amazon’s spending on its business went from $676 million in 2012 to $745 million in 2013. Amazon stock fell 9.5% within the aftermath of the announcement from its close of $403.01 the day before to $364.58.
To boost cashflow, Amazon is reportedly considering raising the cost of Prime customer membership ($79 a year) by $20 or more. Prime customers get free shipping and other benefits. Comments left at some blogs worried that one of these move would cost Amazon customers, but a minority maintained that Amazon has developed enough stickiness that it’d be hard for high subscribers to renounce their benefits through a small price increase.
[Read how Amazon keeps margins tight: Amazon Cuts Cloud Storage Prices, Adds Server Instances.]
Amazon Web Services turned in a great quarter. “Other” revenue (that is believed to be largely AWS), nearly doubled in 2013 over 2012 to $3.2 billion.
Jillian Mirani and Michael Barba, cloud practice analysts at Technology Business Research, wrote in a note that Amazon is “successfully executing” its technique of taking marketshare as a public infrastructure merchant to the enterprise market. It’s doing so by repeatedly adding to its technology stack with things like Amazon Workspaces or cloud-based end-user virtual desktops, tools for application development, and worth-added database systems.
On Feb. 1, AWS will cut prices for the 40th time since launching EC2 in 2006. It’s going to drop Elastic Block Store pricing by 50%, and several other server instance prices would be cut an ordinary of 14%. Amazon is the market leader within the segment, consistent with Gartner. CEO Jeff Bezos seems determined to maintain it that way, despite the parent company’s thin margins.
Private clouds are moving rapidly from concept to production. But some fears about expertise and integration still linger. Also inside the Private Clouds Step Up issue of InformationWeek: The general public cloud and the steam engine have more in common than it’s possible you’ll think (free registration required).
Charles Babcock is an editor-at-large for InformationWeek, having joined the publication in 2003. He’s the previous editor-in-chief of Digital News, former software editor of Computerworld and previous technology editor of Interactive Week. He’s a graduate of Syracuse … View Full Bio
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