January 30, 2014 Last Updated 3:44 pm

Amazon records huge gains in sales, profits, but analysts drive down stock

The Apple syndrome is hitting Amazon, as the company recorded a 20 percent gain in sales, and a 26 percent increase in net income, yet analysts predicted much more, so the stock is down sharply in after-hours trading. My suggestion: get rid of analysts.

Net sales at the online retailer rose to 25.59 billion in the fourth quarter, compared with $21.27 billion, and operating income rose to $510 million (net income came in at $239 million, up from $97 million in the same quarter of 2012). After so many quarters where sales increased, but income did not, one might think that investors would cheer the news – yeah, right.

As usual, Amazon was far less forthcoming when it came to exact sales figures for such things as Kindle tablets. Instead, the earnings reported talked about the 9 second response time for the Mayday button built into the Kindle Fire HDX.

Amazon also said that it had delivered more than 2 billion digital music tracks to customers who had bought AutoRip albums. The tracks go automatically to a customer’s Cloud Player when they buy a CD. They were also delivered to those who had previously bought hard copies of their music in the past from Amazon (which is why I can say that 1 billion of those tracks went to me).

“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.”

Despite all the good news, Amazon’s stock fell over 8 percent in after hours trading, though expect cooler heads to prevail after investors get a close look at the numbers.


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