Amazon record profit fails to please Wall Street

Rocketing demand for Amazon Web Services in FY2015 was still not enough to halt share price drop

Amazon has posted its most profitable quarter ever, but the result still fell short of Wall Street's expectations, causing its share value to fall.

For the fourth quarter ended 31 December 2014, turnover increased 22 per cent to $35.7bn (£24.9bn), compared with $29.3bn in the same quarter the previous year. But analysts had predicted turnover of $35.9bn hence the share price drop.

The cost intensive nature of the business also caused market watchers to express concern over the firm consistently earning money, according to some reports.

Operating profit for Q4 increased a whopping 88 per cent to $1.1bn (£770m), compared with $591m in Q4 2014 and net profit hit $482m (£336m) for the quarter, compared with $214m in the same quarter a year ago.

For the full year, turnover increased 20 per cent to $107bn, compared with $89bn the previous year, a 26 per cent increase. Net profit for the year was $596m, compared with a net loss of $241m in 2014.

Amazon Web Services (AWS), its public cloud business that has experienced stellar growth in the past year, saw sales grow from $4.64bn in 2014 to $7,88bn in 2015. According to the company statement, AWS announced 722 new services and features in 2015, a 40 per cent increase on the previous year.

Jeff Bezos, founder of Amazon looked back to the early days of the online retail giant. "Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100bn in annual sales and serve 300 million customers," he said.

"And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like day one."

Looking ahead the firm said it expects to grow between 17 and 28 per cent in its new Q1, compared with Q1 2015, with operating profit expected to be anywhere in the range of between $100m and $700m, compared with $155m in Q1 the previous year.