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Amazon’s Holiday Season Was Merry But Not Bright Enough

February 2, 2017

Amazon.com forecast a bigger-than-expected fall in operating income for the current quarter as the company continues to spend heavily on new warehouses and video content.

Shares of the company (AMZN), which also reported lower-than- expected fourth-quarter revenue, fell 4% in extended trading on Thursday.

Amazon forecast first-quarter operating income between $250 million and $900 million, below the consensus estimate of $1.34 billion, according to market research firm FactSet StreetAccount.

The company had reported operating income of $1.1 billion for the same period last year.

Amazon is investing more on marketing its Prime program internationally and increasing its original video offerings, though its fast-growing cloud business continues to deliver profits.

As part of its push for faster delivery times, the company said last month it would create more than 100,000 jobs in the United States.

Revenue from Amazon Web Services, the company’s cloud services business, jumped 47% to $3.54 billion, but fell short of the average analyst estimate of $3.60 billion, according to market research firm FactSet StreetAccount.

The world’s biggest online retailer said its net sales rose 22.4% to $43.74 billion in the fourth quarter, compared with the average analyst estimate of $44.68 billion, according to Thomson Reuters (TRI).

Amazon’s net income rose to $749 million, or $1.54 per share, from $482 million, or $1.00 per share, a year earlier.

The company said last month that the 2016 holiday period was its best-ever shopping season, when it shipped 50% more items than the prior year for third-party vendors.