Amazon.com Inc. Q1 earnings reports declined sharply

On Tuesday afternoon, Amazon.com Inc. (NASDAQ: AMZN) reported Q1 earnings is quite disappointing. Their incomes dropped sharply compared to the same quarter last year. This is due to swelling costs. Amazon.com Inc. The financial statements are far below Wall Street estimates. In fact, on the trading session, shares of the megaretailer online company had dropped to 3%, although it could eventually recover, at the end of the closure, the movement of its shares only went flat.

The analysts declare this decline had been predicted, because the big expenses which are needed for Amazon.com Inc. so they could still compete. These expenditures are used to open a wider distribution network and the development of technologies that can support the work of the Amazon. “As long as Amazon’s margins are pressured because they have to build capacity to keep up with growth, investors will likely give them a pass,” Colin Sebastian of Lazard Capital Markets said in an interview.

Q1 this year, Amazon.com Inc. reported they get an income of $ 201 million (44 cents per share). Though, in the same quarter last year, they get $ 299 million (66 cents per share). However, Amazon.com Inc. revenues jumped to 38% to reach $ 9.86 billion, with net income of $ 322 million. This increases the operating margin to 3.3%. Nevertheless, the figures were not yet able to match Wall Street and analysts expectations. Analysts expect Amzaon.com revenue can at least reach 66 cents per share on revenue of $ 9.54 billion. While Wall Street expects the operating margin reached 3.8%.

For expenses, Amazon.com Inc. reported an increase in some sectors; fulfillment costs reached $ 855 million, an increase of about 57%. Meanwhile, technology and content costs jumped to 58% to $ 579 million. While marketing costs rose to $ 327 million, or approximately 63%.

For Q2 of this year, Amazon.com Inc. expects revenue in the range of $ 8.85 billion to $ 9.65 billion. While the company’s net profit could reach the range of $ 95 million to $ 245 million. The Amazon expectation on their income exceeds the expectations of analysts, reaches $ 8.75 billion. Meanwhile, Wall Street expects Amazon.com Inc. could generate net income of $ 356.4 million. Meanwhile, this year they plan to open new nine fulfillment centers, after last year they opened 13 fulfillment centers. It is like the spoken of Amazon’s chief financial officer, Tom Szkutak.

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