Sales rose, but fell short of analyst expectations
Net profit for the year ended December 31 skyrocketed 297.8% to $2.37 billion, or $4.90 per diluted share, ahead of the average estimate of $4.76 per share among analysts surveyed by Thomson Reuters. The fourth quarter saw net income soar 55.4% to $749 million, or $1.54 per share, which handily beat analysts’ projection of $1.35 per share.
The bottom line surge was propelled in part by an effective tax rate of 36.6% for the year and 35.5% for the final quarter. A year ago, Amazon’s net results were trimmed by a 60.6% tax rate for the 12 months year and 48.3% for the fourth quarter.
Net product sales for the 12 months jumped 19.4% to $94.67 billion, while net service sales vaulted 49.0% to $41.32 billion, fueling a 27.1% increase in total net sales to $135.99 billion, shy of analysts’ target of $136.99 billion. Excluding a $550 million unfavorable impact from changes in foreign exchange rates, net sales would have grown 28%.
Fourth-quarter net product sales climbed 15.1% to $30.63 billion, while net service sales leapt 43.6% to $13.11 billion. Total net sales consequently rose 22.4% to $43.74 billion, which failed to meet analysts’ target of $44.68 billion. Backing out a $558 million hit from changes in foreign currency exchange rates, sales would have grown 24%.
Operating income for the year expanded 87.5% to $4.19 billion, or 3.1% of total sales, even though although total operating expenses (which includes cost of sales) nearly kept pace with sales, escalating 25.8% to $131.80 billion. Fourth-quarter operating profit, meanwhile, rose 13.3% to $1.26 billion, or 2.9% of total sales, as total operating expense swelled 22.7% to $42.49 billion.
Looking ahead to the first quarter of fiscal 2017, management projects that net sales will grow between 14% and 23% to a range of $33.25 billion and $35.75 billion, below analysts’ average estimate of $35.95 billion. Moreover, the company expects operating income to come in between $250 million and $900 million, compared with $1.1 billion for the first quarter of fiscal 2016.