Amazon ($AMZN) Doesn’t Deliver to Wall Street

Amazon.com reported its highest quarterly profit ever. Wall Street made the mistake of expecting even more.

The e-commerce giant reported fourth-quarter sales and earnings late Thursday that fell short of analyst expectations. Investors haven’t historically given much thought to profits at Amazon. They have instead focused on top-line growth with the expectation the company’s heavy investment would pay off at some undetermined point in the future.

But that had changed in recent quarters as Amazon’s rapidly growing cloud business, Amazon Web Services, posted significantly higher operating margins than the retail business. Now those profit hopes appear to have gotten ahead of themselves.

There is no question Amazon has become more profitable. Operating income was $2.2 billion in 2015 versus only $178 million in 2014. And operating margins at Amazon’s cloud business expanded to 28.6% from 25% in the third quarter and 16.9% in the fourth quarter of 2014.

Source: Amazon Doesn’t Deliver to Wall Street

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