Amazon shares drop on concerns about rising costs, India growth

Amazon chief executive Jeff Bezos

Amazon chief executive Jeff Bezos

AWS nudged out Amazon's North American e-commerce unit to deliver the most operating income for 2018.

Looking ahead, Amazon expects to deliver revenues of $56 billion to $60 billion in the current quarter and to grow from 10 to 18 percent year-over-year.

Mr. Olsavsky said the guidance includes two percentage points of negative impact from changes in currency exchange rates.

"Amazon's profits continue to soar on the back of strong online holiday sales, which are simultaneously fueling its white-hot ad business", said eMarketer principal analyst Andrew Lipsman. First-quarter operating income will be US$2.3 billion to US$3.3 billion, in line with analysts' estimates of US$2.99 billion. Earnings surged to $3 billion, or $6.04 a share, handily beating analysts' expectations of $5.67, according to Yahoo Finance. The potentially weak revenue outlook highlighted concerns about how Amazon will do in India, its biggest global expansion target, where rules on foreign-owned e-commerce companies are changing.

Amazon shares were down roughly five per cent at $1,634 apiece in after-hours trading.

Shoppers will spend $484 billion globally on Amazon this year, up 26 percent from 2018, and the Seattle-based company will capture more than half of all online spending in the US, according to EMarketer Inc.

"Alexa was very busy during her holiday season", Bezos said.

Amazon founder and chief executive Jeff Bezos, who is also the world's richest man, singled out its smart speaker Alexa, saying it was the company's best-selling device. "In 2018, we improved Alexa's ability to understand requests and answer questions by more than 20% through advances in machine learning, we added billions of facts making Alexa more knowledgeable than ever, developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017".

The company's profits for the quarter were also up, reaching three billion dollars (£2.2 billion), compared to 1.9 billion dollars (£1.5 billion) this time a year ago.

"We are plugging into Amazon the same way we do for everyone: Facebook, Google, Instagram, Pinterest, Snapchat", says Alex Collmer, CEO of VidMob.

However, growth is slowing down. Amazon projected first-quarter growth to hit between 10 and 18 per cent compared to the same period a year ago.

Amazon first broke out how many customers actually pay for Prime membership in April 2018 - a whopping 100 million.

In North America, sales increased 18% year-on-year, while its global sales climbed 15%.

Amazon's widening profits are largely driven by the growth of its high-margin businesses, including its cloud, advertising and third-party seller services.

Amazon closed out 2018 with a bang, well, a $72.4bn fourth quarter, according to figures released Thursday.

Amazon also has been growing its sales from physical stores, including its recently acquired Whole Foods grocery chain.

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