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Amazon’s Shares Tumble On Weak Earnings

January 28, 2016

Jeff Bezos, chief executive officer of Amazon.Jeff Bezos, chief executive officer of Amazon.
Jeff Bezos, chief executive officer of Amazon.Photograph by Mike Kane—Bloomberg via Getty Images

(Reuters) – E-commerce giant’s profit in the holiday quarter missed analysts’ estimates by a wide margin as operating expenses rose and growth slowed in its cloud services business.

Shares of the world’s biggest online retailer (AMZN) plunged nearly 15% to $542 in extended trading on Thursday.

The company’s total operating expenses surged more than 20% to $34.64 billion in the fourth quarter.

Amazon has been spending on rolling out several new services for members of its $99-a-year Prime loyalty program, including one-hour delivery and original TV programming, to attract customers in a highly competitive online shopping market.

Net sales from its cloud services business, Amazon Web Services, rose 69.4% to $2.41 billion, compared with a growth of more than 78% in the third quarter.

Amazon’s net sales in North America increased 24% to $21.5 billion.

Net profit rose to $482 million, or $1.00 per share, in the quarter ended Dec. 31 from $214 million, or 45 cents per share, a year earlier.

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Analysts on average had expected a profit of $1.56 per share, according to Thomson Reuters I/B/E/S.

Net sales rose 21.8% $35.75 billion, but missed analysts’ expectations of $35.93 billion.