Amazon.com Inc (NASDAQ:AMZN) became the latest tech giant to disappoint the market with shares down 16% in after-hours trading, as third quarter revenues missed Street forecasts and as it lowered guidance for the fourth quarter.
The company said it expects to post fourth-quarter revenue between $140 billion and $148 billion, representing growth of 2% to 8%, well below current analyst forecasts of around $155.15 billion (according to Refinitiv).
The numbers reflect an adverse forex hit of around 460 basis points and the group forecast operating income for the fourth quarter of between $0 and $4.0 billion, compared with $3.5 billion in the fourth quarter 2021.
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For the third quarter, Amazon reported a 15% rise in net sales to $127.1 billion, slightly below forecasts of $127.46 billion, boosted by a 20% increase in North America sales to $78.8 billion.
AWS sales improved 27% year-over-year to $20.5 billion but sales in the International business fell 5% to $27.7 billion compared to last year.
Operating income fell to $2.5 billion compared with $4.9 billion in third quarter 2021 with the North American business dipping into the red with a loss of $0.4 billion compared to income of $0.9 billion in 2021.
The International unit reported increased operating losses of $2.5 billion (vs. $0.9 billion loss last year), but AWS fared better with improved operating income of $5.4 billion, up from $4.9 billion last year.
Net income decreased to $2.9 billion in the third quarter, or $0.28 per diluted share, compared with $3.2 billion, or $0.31 per diluted share, in third quarter 2021.
This included a gain of $1.1 billion included in non-operating income from the investment in Rivian Automotive.
Andy Jassy, Amazon CEO said: “We’re encouraged by the steady progress we’re making on lowering costs in our stores fulfilment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.”
“There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.”