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Opinions of the company Amazon.com Inc.NASDAQ: AMZN) stocks moved into higher selling on Thursday as the market digested a mixed Q4 report.
Leading up to the quarter’s results was a big hit in revenue, with $149.2B in revenue beating estimates by $3.43B. However, AWS products came in slower than previously expected, hitting $21.38B against expectations of $21.76B. That slight disappointment was offset by continued growth in the retail economy and strong North American sales.
Diluted earnings per share of $0.03 also missed expectations by a wide margin. That said, net income for the quarter included a pre-tax loss of $2.3B related to the company’s investment in Rivian Automotive ( RIVN ).
“In the short term, we are facing financial challenges, but we are still looking forward to long-term opportunities for Amazon,” said Andy Jassy. “Most of the distribution of the market in Global Retail and IT is still in retail stores and shopping centers; and while this equation is rising gradually, we believe that our customers who are leading in these areas together with the results of our hard work and creating good products day by day, it will lead to great growth in the coming years.”
The company expects revenue between $121B and $126B in the first quarter of 2023 versus the $125.13B Street consensus. Operating income is expected to be between $0 and $4B compared to $3.7B in the first quarter of 2022. The directors added that no revisions are included in the guidance.
Shares of the Seattle-based tech giant continued to rise 3% higher after the results were revealed before crossing over 6% while after-hours trading advanced.
Shares also took a big hit when CEO Andy Jassy joined the company for the first time. He also highlighted plans to improve the business as a priority, but was careful to note that big investments in big situations have helped Amazon become the company it is today.
Jassy also explained his growth in the company’s business and international business activities. In particular, regions such as India and Turkey are beginning to show significant growth, in his opinion.
In addition, he answered questions about AWS and its limitations.
“A lot of businesses right now are acting cautiously … we’re also thinking a lot about reducing our costs,” Jassy told analysts. “We will find a way to help our customers spend less money… If it is good for our customers to find a cheaper way in an uncertain economy our team will spend more money doing this. .”
He added that this strategy will support the company’s long-term interest even if it may affect quarterly results from time to time. Instead, the business is focusing on building long-term relationships and highlighting the sustainability of AWS versus on-premises services.
Finally, Jassy spoke about the company’s transition to cost reductions in other areas of the business, such as stores and equipment.
“When we looked at some of the products we sold in stores, there were some areas that we didn’t believe were going to move the needle on Amazon,” he said.
He said that the decision to return some money and improve the business ended with the decision to remove the 18K positions, a decision that he describes as the most difficult one he had to make.
He added that his team is not looking to optimize quarterly results, but rather to build business and retain customers for the long term. However, he remained optimistic about the space economy, health care, entertainment and logistics among other areas.
“It only takes one or two of them to become the fourth pillar at Amazon for us to become a very different company over time,” concluded Jassy.
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(This article has been edited to add comments from sources)
