February 1, 2012- Internet giant Amazon continues its fast track of growth, but higher expenses in the company are eating away at its profit. The company on Tuesday reported its earnings for the fourth quarter of 2011.
The earnings report fell short of expectation of Wall Street analysts. Amazon also said it could have a loss in the current first quarter of 2012. The earnings report and comments about the current quarter caused its stock price to fall close to 10% in trading after Tuesday’s close.
The company’s operating expenses were up 38% and were the main cause of the company’s lower profits. Amazon also has invested large sums of money to grow the business, including signing new deals for digital content and building centers for order fulfillment in different locations in the U.S.
Because those higher operating expenses have eaten into the company profit margin, its stock has fallen close to 20% in just the last 90 days. Net income for the company was $177 million or 57% less than the $416 million profit from the same quarter in 2010. Revenue was $17.4 billion or 35% higher than the same quarter a year ago. However, revenue was $1 billion lower than Wall Street expectations.
Amazon also disappointed Wall Street with his outlook for the current quarter. The company expects sales not to exceed $13.4 billion and could lose up to $200 million during the quarter.