SEATTLE _ Amazon.com continued its ballooning expansion in sales in the latest quarter, but its profit fell short of Wall Street's rosy hopes as the company sank money into beefing up its ability to handle more products and rent out more computing power and storage.
The Seattle tech juggernaut on Thursday reported a 29 percent increase in sales to $32.7 billion, slightly more than analysts expected on average. But profit of $252 million came to 52 cents per share. Analysts on average expected the company to yield 78 cents per share. Last year in the same period Amazon posted $79 million in profit, or 17 cents per share. Announcement of the results took an immediate toll on Amazon shares, which earlier this week were trading near record highs. Shares fell nearly 7 percent to $763.19 in after hours trading, bringing Amazon below the market value of Facebook, which in the process took Amazon's place as America's fourth most valuable publicly traded company.
Amazon's results often have yielded surprises, but investors in recent quarters had come to expect tidy earnings, as the Amazon Web Services cloud computing business brought home increased profitability.
In a call with reporters, Chief Financial Officer Brian Olsavsky said the results reflected major investments in warehouses ahead of the holiday season, which come with cost penalties as they don't operate as efficiently as established facilities. Amazon is also in the midst of a ramp-up in spending for video content, a critical perk of its Prime Now loyalty program.
The company is also busy strengthening its India operations, a big bet, and in building out the capabilities of Alexa, its artificial intelligence software.
Amazon's hiring frenzy continues unabated, with 306,8000 employees at the end of the quarter, 38 percent more than a year ago and an increase of nearly 40,000 in less than three months. "There's a lot of hiring to support the projects we're investing in," Olsavsky said.
AWS, the cloud computing unit, saw a big boost in sales _ up 55 percent to $3.2 billion. It yielded $861 million in operating income, twice as much as in the same quarter a year ago, indicating increasing profitability as Amazon scales up the operation.
Net global shipping costs rose 42 percent, outpacing the growth in sales, a sign of the challenges of satisfying growing demand. For the critical holiday season, the company posted guidance showing revenue between $42 billion and $45.5 billion for the fourth quarter, up between 17 percent and 27 percent vs. the same period a year ago.
